As food industry businesses are well aware, in Minnesota, you cannot take a credit for tips when computing minimum wage, nor can an employer require tip pooling (Surly Brewing recently paid $2.5 Million in back wages for alleged tip pooling). In response to cities in Minnesota passing or introducing higher minimum wage ordinances (such as $15 in Minneapolis and St. Paul), Republican lawmakers introduced a bill that would allow employers to pay their tipped employees a lower minimum wage. The bill is in response to concerns from primarily restaurants and bars, regarding the strain a higher minimum wage will incur on them. The House committee is currently debating this proposed bill.
Under the bill, large employers (employers with annual gross receipts of $500,000 or more), may cap an employee’s minimum wage at $9.65, so as long as the employee makes an average of $14 per hour, including tips. For small employers (employers with annual gross receipts of $500,000 or less), an employer may cap an employee’s base wage at $7.87 if the employee makes an average of $12 per hour, once the tips are included. If an employee does not make $14 or $12 per hour, depending on the employer’s size, the employer is required to pay them the higher of the Minnesota or federal minimum wage. Stay tuned!