Wages and Tips: Court ruling could eventually have nationwide impact

A federal appeals court in California this week ruled in a case that could have national implications and change how a lot of restaurants do business-even right here in the Twin Cities.

For a long time, waiters and bartenders have been paid less than federal minimum wage on the grounds that tips from customers make up most of their compensation. Although some states have laws mandating higher pay, federal law sets the minimum wage for tipped employees at $2.13 per hour as long as their total pay, including tips, is at least the $7.25 minimum wage for other workers.

But what about times when a normally tipped employee is doing work that doesn't involve tipping? Like cleaning, food preparation or the like?

That was the question before the 9th U.S. Circuit Court of Appeals this week. Do businesses have to pay at least $7.15 an hour while tipped employees are engaged in work that does not produce tips?

The court's answer? Yes.

The ruling stemmed from a lawsuit by a Phoenix restaurant worker who argued he spent significant time at work doing things like brewing tea and coffee, cutting up fruit for drinks, sweeping, cleaning and other tasks that do not produce tip income.

After being rejected by a lower court, the worker appealed. And won.

We can see both sides in this. There is a lower minimum wage for tipped employees, but it doesn't seem fair they should get that smaller wage when doing jobs where there is no chance they can earn tips. But we also can see the nightmare ahead for employers trying to keep track of hours and fractions of hours-something we think the servers won't find too enjoyable either.

There's no reason to worry about this-or anticipate it, either-around here just yet. The 9th Circuit's jurisdiction only extends to seven western states along with Hawaii and Alaska. But there could be an appeal by the restaurant company to the U.S. Supreme Court. And a ruling there would have nationwide impact.

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