A few years back, some progressive (?) restaurants around the country made headlines by paying their waitstaff more than minimum wage and putting the kibosh on customer tips.
This broke with the traditional way of paying customarily-tipped employees
in scratch offs and iced animal crackers. That is, most employers would pay the minimum-required cash wage of $2.13 under the Fair Labor Standards Act (unless your state requires a higher minimum wage) and use customer tips as a credit against the $7.25/hr. minimum wage obligation to the employee. This is known as, you guessed it, the tip credit. Continue reading