Banker Leaves 1% Tip On $133 Lunch Bill In Defiance of 'The 99%' [UPDATED]

Tip Credit History

1966 The Tip Credit is created.  In 1966, the Tip credit was 50%.   In 1980, the tip credit is reduced to its lowest  rate at 40 percent.  Today, in 2010, the tip credit  slightly exceeds 70%- the  highest in its  history.  If the tip credit returned  to 50 percent, then the federal subminimum wage for waitresses and waiters would be $3.63 today instead of $2.13 per hr.

When the U.S Dept of Labor states “If an employee’s tips combined with the employers direct wages do not equal the minimum hourly wage, the employer must make up the difference”, it only applies to the work week, not just the day you failed to make minimum wage.


(Federal min wage )$7.25 x 7 = $50.75. (daily)     or   $7.25 x 30 hrs = $217.50 (weekly)     In Santa Fe,  for example if you worked 30 hours, you must have earned at least $295.50 for the week combining tips and wage.  $2.13 +$7.73 (tip credit) = $9.85. If not, the employer must reimburse you.

Overtime on subminimum wages is determined by multiplying the employee’s regular rate of pay by 1.5 and then by subtracting the hourly tip credit.  The employee’s regular rate of pay can never be less than the full applicable minimum wage rate. Example $7.25 (Fed min wage rate or applicable min wage rate)  x  1.5   minus  $5.12 (Tip Credit)  = overtime hourly rate for servers who receive sub minimum wages.

Vacation pay is considered a “Benefit” and not covered or enforced by Federal/state wage and hour laws. You can file a discrimination case, however, if your employer elects to only provide vacation pay to employees of a certain ethnic background or gender who perform the same job.
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