Shelley is a waitress at one of the outlets of Bean Foods, a multinational restaurant chain. Her hourly salary is $3. She generally earns $10 as tip every month. In June, 2012, she received $40 as tip

Question

The next month, her employer reduced her hourly wage to $2. Is the employer's action legal in the context of the Fair Labor Standards Act (FLSA)? If not, how much should Bean Foods pay Shelley?

Answer 1

The FLSA requires that a minimum wage of $7.25 be paid to all employees in industries engaged in interstate commerce or the production of goods for interstate commerce.
Employees who receive a significant portion of their income from tips are entitled a lower minimum wage from their employer. An employer may pay a tipped employee not less than $2.13 an hour in direct wages if that amount plus the tips received equal at least the federal minimum wage, the employee retains all tips and the employee customarily and regularly receives more than $30 a month in tips. If an employee's tips combined with the employer's direct wages of at least $2.13 an hour do not equal the federal minimum hourly wage, the employer must make up the difference. In this case, Bean Foods cannot pay Shelley $2 as hourly wage as it is below the legal limit of $2.13. Moreover, Shelley does not regularly receive more than $30 a month in tips. Her employer must therefore pay her a minimum of $2.13 per hour.