Wages and Hour Laws For Tipped Workers in Michigan

Smiling waitress in coffee shop holding money at register

How Wage and Hour Laws Apply to Service Workers

Service workers have a unique set of rules when it comes to wage and hour pay. Whether you wait tables, bartend, bus tables, or work in any service capacity, tips are an essential part of your earnings in which you count on to supplement your salary. If you receive tips as part of your pay, it's critical to know your rights and your employer's responsibilities to ensure you are getting paid fairly. Here's what you need to know.

What is the Tipped Minimum Wage?

The current minimum wage in Michigan is $9.65. Tipped wages in the state are calculated at 38% of its standard minimum wage, making the minimum wage for tipped workers $3.67. Michigan plans to increase tipped workers' minimum wage to $4.58 by the year 2030.

What are the Gratuity Standards in Michigan?

The state of Michigan defines gratuity as "tips or monetary contributions voluntarily paid to employees by customers for services performed." There are a particular set of standards an employer must reach to be able to pay an employee this tipped minimum wage:

  • If the employee receives gratuities in the course of employment
  • The gratuities must equal or be greater than the difference between the tipped and standard wages
  • Gratuities are included on an employee's declaration for federal insurance contribution act purposes
  • The employer notifies the employee of the rules regarding gratuities

Does Michigan Have Guidelines for Tip Pooling and Sharing?

Michigan currently does not have any laws addressing tip pooling and sharing. There is no provision prohibiting employers from requiring employees to participate in such pooling or sharing.

The standards employers must follow are those set by the Federal Labor Standards Act. Under the FLSA, an employer may require tip pooling. Tip pooling is defined as taking tips earned by all employees during a specific period and re-distributing them based on a pre-established formula. Tip sharing means an employee who customarily does not receive tips, may get a portion—for example, a baker, chef, or dishwasher.

Some employers opt to distribute the tips evenly, while others distribute differently for positions, such as wait staff versus bussers. Employers are not allowed to retain tips for any reason other than pooling.

Overtime for Tipped Employees

Tipped employees are eligible to receive overtime. The regular rate is calculated by taking the employee's total wages earned in a workweek, plus any tip credit or other credits, and dividing them by the total number of hours worked. The regular rate does not need to include any other tips earned beyond tip credit. The overtime pay is still time and a half of their regular rate.

What to Do if Your Employment Rights Are Being Violated

Service employees may not fully understand their rights when it comes to minimum wage and gratuities. If your employer fails to follow regulations employee protection laws, then you have the right to seek justice. If you think your employment rights are being violated, we are here to help. We'll walk you through every step of the process. When going through a challenging time, Grewal Law PLLC is here to support you and protect your employment rights.

Call Grewal Law PLLC at (888) 211-5798 to schedule a consultation.

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