New DOL Regulations Aim to Protect Rights on Tipped Workers

The New Jersey Department of Labor and Workforce Development (DOL) has announced new regulations that will ensure protections and fair wages for tipped workers. Details on the regulations can be found here.

Additionally, the Department also has created a “common language” explainer document to help employers learn their obligations to tipped workers, and tipped workers to know their rights under the law, which can be found here.

“Tipped workers have been hit especially hard during the COVID-19 pandemic,” said Labor Commissioner Robert Asaro-Angelo. “These regulations guarantee these workers are paid a fair wage, which will, in turn, increase income stability for the women, immigrants, and minority workers who predominantly are employed in tipped positions.”

A “tipped employee” is defined as any employee who customarily and regularly receives more than $30 per month in tips, typically in businesses such as restaurants and catering, barbershops, hair and nail salons. More than 333,000 people, or 8 percent of the active workforce, were engaged in tipped work occupations, according to 2018 data.

An employer of a tipped worker must either pay the tipped employee the state minimum wage in full, or the employer may choose to take a “tip credit” for a portion of the employee’s tips while paying the employee a minimum cash wage. Tip credit plus cash wage must equal the state minimum wage.

For example, in New Jersey the minimum cash wage is $3.13 per hour. The state minimum wage is $11 per hour. That means employers can claim a maximum of $7.87 per hour as tip credit. (Cash minimum + tip credit = NJ minimum wage.)

The minimum cash wage is scheduled to increase along with the minimum wage over the next several years.