Utah's new law that condones sharing tips among restaurant workers who traditionally haven't received them may put employers on firm footing to run a nontraditional tip pool, but it likely won't push businesses to pay subminimum tipped wage, experts told Law360. …
Only seven states — Alaska, California, Minnesota, Montana, Nevada, Oregon and Washington — prohibit subminimum wage for tipped workers. Washington, D.C., is phasing it out over the next few years after voters approved a measure to end it.
But Jeff Ruzal, a member of Epstein Becker Green who counsels hospitality employers, said S.B. 73 likely isn't going to have any impact on whether businesses pay tipped minimum wage or on workers' incomes. When employees are paid at least the standard minimum wage, none of the complicated requirements for paying subminimum wage — which include covering shortfalls, disclosing the practice to workers and maintaining records — apply, he said. Fast-casual restaurants were free to do tip pooling before S.B. 73, he said.
"I think that it's really more of a highlighting rather than creating new law," he said.
But bringing attention to tipping can be beneficial because norms around tipping are constantly evolving, he said. Smartphone apps and self-service kiosks often ask a customer to leave tips, which can prompt a consumer to wonder what they're for and who they're going to, he added.
"We have become more of a tipping culture than we had been," he said.
In restaurants and other businesses where tipping may be becoming more of a customary practice than it had been in the past, employers may find that following tip credit rules is too much of a hassle, Ruzal said.
Coming up with a way to distribute tips, monitoring each person's earnings and making additions to their pay when needed to bring them up to $7.25 per hour can be administratively burdensome, Ruzal said. For some employers, the simpler approach is to pay everyone at least the standard minimum wage so they don't have to think about tip math, he said.
"Some employers probably take a very passive approach to it, which is to say we're not going to think about treating our workers as quote-unquote tipped employees under the federal and state law regimes," he said. "To the extent that a customer wants to leave them a tip, even if it's not readily apparent what the tip-earning work was or what the criteria would be, sure, leave the tip."