Florida Minimum Wage and Reporting Tips for Overtime Purposes

Q: We are starting a new restaurant business. Some employees will only receive hourly wages, others will also receive tips. There are so many start-up details to cover. Of special concern are the laws governing wages and tips. A brief summary will be helpful.

— “Temporarily Overwhelmed in South Florida’

A: Starting a business of any kind is difficult. Restaurants are especially challenging. We wish you, and all our readers, the best in business success in the New Year. Though not a complete listing, here’s a short legal summary of the wage laws you requested. The Fair Labor Standards Act (FLSA) is the main federal law, and Florida Statute 448.110 is our main state law.

I. Minimum wages: Florida voters approved a constitutional amendment on Nov. 2, 2004, creating a state minimum hourly wage. It was originally set at $6.15, with annual increases tied to the rate of inflation. State employers are required to pay it to their employees for all hours worked. The minimum hourly wage for 2008 was $6.79 and increased to $7.21 on Jan. 1, 2009.

The definitions of employer and employee for state purposes are the same as those established under the FLSA. Employers have to pay the higher of the federal or state minimum wages. They have been paying a higher Florida rate since 2007. This will continue into 2009 with the federal hourly rate set at $6.55. But they will switch over to the federal hourly rate when it rises to $7.25 on July 24, 2009.

Florida employers are required to prominently display a bilingual ‘Notice to Employees’ minimum wage poster in the work establishment. The 2009 poster can be downloaded from the Agency for Workforce Innovation website. This state poster is in addition to the federal notice requirement for its minimum wage.

II. Tip credits: Tipped employees are those who regularly receive over $30 a month in tips. Employers may count tips received as a part of the employee’s minimum wages, but must still pay tipped employees a specified direct hourly wage. Effective Jan. 1, 2009, Florida tipped employees must be paid a direct hourly wage of $4.19. This is based on the new state minimum hourly wage of $7.21 less the $3.02 maximum tip credit. (FLSA direct hourly wage is $2.13 per hour.) If the employee’s tips combined with direct wages don’t equal required minimum hourly wages, employers must pay the difference.

An employer deducting tip credits must inform each tipped employee about the allowance before using the credit. Also, the law forbids any arrangement between an employer and tipped employees for any portion of the tips to be received by the employer. Tips are the sole property of the tipped employee.

If an employer violates tip credit rules, the tipped employee keeps the tips and the employer must pay the full minimum wage. There is also a fixed service charge loophole that protects employees. A compulsory percentage add-on to customer checks, even if called a tip or gratuity, is treated as part of the employer’s gross receipts and the employee must receive the full minimum wage. This extends to illegal tip credits for walk-outs, breakages and cash register shortages.

III. Tip pooling: The requirement that tipped employees retain their own tips doesn’t prevent valid tip sharing arrangements among regularly tipped employees like servers, bartenders and counter personnel. These tipped employees are not required to share them with other employees like kitchen personnel who aren’t customarily tipped.”

Answering these broad-based questions isn’t easy. Help is a phone call away. You can contact Nancy Cavey, an experienced long-term disability attorney at 727-477-3263