Bucking the standard that has existed under federal law and in most states for decades, tipped employees in Pennsylvania soon will have to earn more than four times as much in tips before their employers may take a tip credit and pay those employees less than the standard minimum wage. That revision is but one of several regulatory changes proposed by Governor Tom Wolf’s administration and approved by the state’s Independent Regulatory Review Commission (IRRC) regarding tipped employees.
The regulation will be submitted to the Pennsylvania Attorney General for legal review and, if approved, published in the Pennsylvania Bulletin and become effective 90 days later.
Since 1998, employers in Pennsylvania have been able to pay tipped employees a base rate of $2.83 per hour if they earn at least $30 a month in tips, with tips making up the remainder of the employee’s wages to reach the standard minimum wage, currently $7.25 per hour. This difference is commonly known as a “tip credit.” The $30 level is found in both the federal Fair Labor Standards Act (FLSA) and the laws of other states that allow a tip credit.
If a tipped employee’s combined base wages and tips do not equal at least $7.25 per hour for all hours worked, then the employer must make up the difference. Under the new regulations, tipped employees will need to earn at least $135 in tips before they qualify as tipped employees for whom their employer may pay the...
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