The Tip Credit 

When an employer relies on a worker’s tips to meet its obligations to pay the minimum wage, this is called taking a “tip credit.” The maximum credit an employer can take under federal law is currently $5.12 per hour. The employer must pay, as a cash wage, $2.13 to meet the current minimum wage obligation of $7.25 ($2.13 hourly wage plus $5.12 credit = $7.25).

However, employers may only take a credit for an employees’ tips in limited circumstances and if all preconditions for taking a tip credit are satisfied by the employer.

Can an employer use the tip credit for food and other delivery workers?

Legally, the answer depends on the jurisdiction and state labor laws and regulations. If you are a delivery driver and your employer is using the tip-credit, you should not assume that your employer is using the tip credit lawfully. You could be entitled to a significant award of back pay and penalties. You should seek legal advice and counsel from experienced pro-employee Worker’s Rights attorneys like the ones at Herrmann Law.

As an example, in Connecticut, use of the tip credit for delivery drivers is NOT allowed pursuant to labor department regulations. See Amaral Brothers, Inc. v. Dept. of Labor, 155 A. 3d 1255 (Conn. Supreme Court 2017). The labor department issued regulations disallowing the tip credit for delivery drivers for several reasons. As reported in the case, the department of labor found that delivery drivers were not in the same position as other traditionally tipped workers like wait staff and bartenders. As such, delivery workers had an impaired capacity to earn gratuities and the tip credit should not be allowed. The facts noted included:

• Drivers do not have an opportunity to establish a rapport with customers which can diminish tips — by contrast, wait staff can build rapport because of multiple interactions including taking the initial order, letting the customer know status, checking on customer satisfaction and needs and cleaning the service area
• Drivers have only one tip-making opportunity at a time — while wait staff often provide service to multiple customers during the same time
• Drivers spend most of their time conducting non-customer-facing duties like picking up the items for delivery and driving — wait staff spend the majority of their working time doing customer-facing tasks
• And more

For these and other reasons, the Connecticut department of labor barred employers from using the tip credit for delivery drivers and workers. The Connecticut Supreme Court affirmed the department’s decision.

Unrelated Duties or Side-Work

There is a similar argument that can be made under the federal labor laws. Federal labor regulations distinguish service and non-service duties done by traditionally-tipped workers. The tip credit is generally only available when an employee is engaged in service work as opposed to when an employee is engaged in non-related work such as side-work. But, for delivery workers, even if the tip-credit is allowed, how much time is actually involved in providing service to customers. There is certainly an argument to be made that, other than the few minutes spent with the customer, all other work time for a delivery worker is not eligible. Indeed, the tip-credit is not allowed if a worker spends over 20% of their time performing non-tipped duties.

Call the Employee Rights Attorneys at Herrmann Law Today

For more information, call the Employee Rights attorneys at Herrmann Law. If you think that your employer has violated your rights as an employee, call us. We are proven, experienced, employee-focused attorneys representing workers across the United States in all types of workplace disputes. Use our Online Contact page or call us at (817) 479-9229. We are more than just a law firm for employees – we are an employee’s fiercest advocate, equipping employees with the legal representation needed to achieve the best result possible.