The Tip Credit Makes an Appearance on the Campaign Trail

So far this election season there has not been much said about how the candidates might change our current employment laws. I think we might still be at the stage of the campaigns where candidates are trying to tell a broader narrative and they will fill in the details later on.

However, at least one of the candidates has made statements that make me excited about the future of America’s employment laws.

The most important, specific employment law proposal I have heard so far has come from Hillary Clinton.

As I have explained elsewhere, currently individuals who regularly receive more than $30 a month in tips can be paid a “tip credit” minimum wage of $2.13 an hour with tips making up the difference between $2.13 and the regular minimum wage of $7.25.

Employers love being able to pay less than the regular minimum wage. Even though the employer is supposed to pay the tipped employee the difference if the tips plus cash wage do not add up to $7.25 for all hours worked in a work week, it rarely happens that way.

At a New York City rally earlier this month Clinton said :

““It is time we end the so-called tipped minimum wage. We are the only industrialized country in the world that requires tipped workers to take their income in tips instead of wages. That’s shameful.”

It appears Clinton is proposing all employers be required to pay their employees the full federal minimum wage regardless of whether the employee receives tips from customers.

Of course the restaurant industry will fight Clinton’s proposal tooth and nail. There will probably be the usual cries of firings and business closings as far as the eye can see. At least eight states have abolished the tip credit under their state laws. Funnily enough, restaurants still exist in those states.

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