While the new Order is effective January 1, 2011, employers have until March 1, 2011 to come into compliance so long as any additional wages due under the Order are paid retroactively. Below are some of the Order’s major changes:
Mandatory Hourly Rates: The new Order requires all hospitality and restaurant workers be paid on an hourly basis. Increased Hourly Rates for Tipped-Employees: The Order increases the required wages for some employees by providing for the following minimum hourly wages:
- tipped food service employees – $5 (from $4.65) with a tip credit of no more than $2.25;
- service employees who earn tips – $5.65 (from $4.90) with a tip credit of no more than $1.60;
- employees working in resort hotels – $4.90 (from $4.35) with a tip credit of no more than $2.35.
An employer may take a credit toward the basic minimum hourly rate if the employee receives tips. However, the new Order requires that the employee be notified in writing if any credit is taken.
Tip Pooling: The Order permits mandatory tip pooling among eligible tipped occupations so long as detailed procedural requirements are met by the employer. The Order also reiterates the legality of mandatory tip sharing. Tip pooling and tip sharing are allowed on a voluntary basis in all industries, but may only be employer-mandated in the food service industry. Employers must keep records of tip pooling or tip sharing for six years.
For more information please see this Wage Order Summary.