As of the date this article goes to press, both the federal and the Pennsylvania minimum wage laws set the minimum wage at $7.25. For some employers however, the minimum wage calculation can be more complicated than simply multiplying the number of hours worked by $7.25.
As is well known, restaurants use, and restaurant wait staff rely on, tips to make up the bulk of wait staff compensation. Both the FLSA and the Pennsylvania Minimum Wage facilitate this practice by providing for a “tip credit.” The tip credit permits the employer to rely on tips actually received by the employee to make up a portion of that employee’s minimum wage. In Pennsylvania a restaurant owner must pay tipped employees $2.83 per hour, relying on a tip credit of $4.42 to make up the additional amount needed to reach the minimum wage of $7.25.
Use of the tip credit results in certain legal restrictions on the restaurant’s employee operations. For example, a restaurant employer who relies on the tip credit must use care in pooling tips among its employees. A restaurant owner who uses the tip credit cannot divert tip pool money to individuals who are not “traditionally tipped” individuals. Effectively, this means that only wait staff can safely be compensated from the pool; managers, cooks and kitchen staff cannot be compensated from the pool.