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Lucy, Esq.
Lucy, Esq., Lawyer
Category: Employment Law
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Experience:  Former judicial law clerk, lawyer
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What is the overtime rate wait staffs in MA?

Customer Question

What is the overtime rate for tipped wait staffs in MA?
Submitted: 10 months ago.
Category: Employment Law
Expert:  Lucy, Esq. replied 10 months ago.

Hi,

I'm Lucy, and I'd be happy to answer your questions today.

The reason employers are allowed to pay employees less is because of something called a "tip credit." The law assumes that employees will be able to make a certain amount of money per hour in tips to make up the difference between the hourly wage paid to servers and the minimum wage required by law (and when they don't, the employer actually has to pay the difference as wages, which many people don't know). When an employee is working overtime, they're entitled to 1.5 times the minimum wage, but the tip credit doesn't change.

The tip credit is $6.65 per hour, and servers must be paid a minimum of $10/hour including tips (as of 1/1/16), or $15/hour for overtime. And that means MA employers should be paying $8.35/hour to tipped employees who are getting overtime.

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Customer: replied 10 months ago.
Hi,Lucy thanked you for your quick response answer yesterday. The question was " What is the overtime rate for tipped wait staffs in MA?"
Hope you don't mind, can I ask you a few more questions?1. Currently, $ 3.35 per hour for all the tipped wait staffs under 40 hours. Does the State of MA set that $3.35 rate? Can that rate be higher or lower?2. That "tip credit $ 6.65 per hour, is that set up by the State? Can that tip credit be higher or lower?
3. That $ 8.35 per hour for the tipped wait staffs on the overtime, the $ 8.35 per hour, did that set up by the State? Can it be higher or lower on the rate?4. Why would my payroll company tell me that, anything over 40 hours, the full 40 hours rate would change to $4.88 per hour, not $3.35 anymore? And any overtime hours would be $9.88 per hour, not $8.35 anymore?Hope you can educate me on this employment matter!Thank You very muchDavid
Expert:  Lucy, Esq. replied 10 months ago.

1. There is a federal minimum wage that states cannot reduce. Massachusetts has chosen to set a higher minimum wage, which is currently $10/hour. Federal law also sets the minimum tip credit. In Massachusetts, an employer must pay at least $3.35/hour to tipped employees, and their total wage must work out to $10/hour.

http://www.mass.gov/ago/doing-business-in-massachusetts/labor-laws-and-public-construction/wage-and-hour/tips.html

2. Employers could choose to pay their employees a livable wage and not use a tip credit. They cannot use a higher amount for the tip credit than what is set by law.

3. An employer can ALWAYS pay more than the minimum wage - that's why it's called the minimum wage. Federal law sets the basics, an amount that the state cannot go below (which is actually $7.25 per hour) and the requirement that people who exceed 40 hours per week be paid time and a half. Federal law also prohibits employers from using 1.5 times the tip credit for tipped employees. But MA set the minimum wage in MA, so it's both.

4. It sounds like you got a raise. Massachusetts says they only have to pay you $3.35 per hour. I've never heard of an employee choosing to pay extra for the 40 hours per week a person works regularly just because they happened to also work overtime, but that's their prerogative. An employer can always pay more than required, never less. $9.88 is what's required for overtime under the new minimum wage law, which increased minimum wage to $10 on January 1 (and therefore requires you receive $15/hour with overtime).