The Department also has created a common-language explainer document to help employers learn their obligations to tipped workers, and tipped workers to know their rights under the law. It can be found here: https://www.nj.gov/labor/assets/PDFs/NJDOLTippedWorkExplainer48320.pdf
"Tipped workers have been hit especially hard during the COVID-19 pandemic,” said Labor Commissioner Robert Asaro-Angelo. “These regulations guarantee these workers are paid a fair wage, which will, in turn, increase income stability for the women, immigrants, and minority workers who predominantly are employed in tipped positions.”
A Tipped Employee
An employer of a tipped worker must either pay the tipped employee the state minimum wage in full, or the employer may choose to take a “tip credit” for a portion of the employee’s tips while paying the employee a minimum cash wage. Tip credit plus cash wage must equal the state minimum wage.
For example, in New Jersey the minimum cash wage is $3.13 per hour. The state minimum wage is $11 per hour. That means employers can claim a maximum of $7.87 per hour as tip credit. (Cash minimum + tip credit = NJ minimum wage.)
The Minimum Wage
If the minimum cash wage plus an employee’s tips do not equal at least the state minimum wage, then the employer must pay the employee the difference.
In cases where a tipped employee spends more than 20 percent of their time doing related duties that are non-tipped, the employer is prohibited from taking a tip credit for that time and must pay the full minimum wage. This is referred to as the 80/20 rule.
Similarly, if an employee performs multiple jobs for the same employer that include tipped and non-tipped duties, the employer may take a tip credit only for the hours during which the employee performed tipped work.
Exclusive Benefit of Employee
These regulations are a result of a law signed by Gov. Murphy last year, increasing the state minimum hourly wage for most employees to $15 per hour incrementally over the course of five years. The law was part of the Murphy Administration’s commitment to workers to earn a living wage.
Jon L. Gelman of Wayne NJ is the author of NJ Workers’ Compensation Law (West-Thomson-Reuters) and co-author of the national treatise, Modern Workers’ Compensation Law (West-Thomson-Reuters). For over 4 decades the Law Offices of Jon L Gelman 1.973.696.7900 firstname.lastname@example.org has been representing injured workers and their families who have suffered occupational accidents and illnesses.
Blog: Workers ' Compensation
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Author: "Workers' Compensation Law" West-Thomson-Reuters