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Pennsylvania faces a tip-credit change that many servers may not even notice

Starting Aug. 5, restaurants can only use the tip credit for servers and bartenders making at least $135 a month in gratuities.
Photograph: Shutterstock

Full-service restaurants in Pennsylvania will find out starting Aug. 5 if a change in the state’s rule for using a tip credit will be the non-event it’s near-universally expected to be.

The revision requires restaurateurs to pay servers, bartenders and other routinely tipped workers the full minimum wage of $7.25 an hour if they take in less than $135 a month in gratuities. For a waitstaff member who works a five-hour shift for five days per week, that benchmark is the equivalent of pocketing $1.35 an hour in tips, or $6.75 for the whole shift.  

“I would say if you are earning tips lower than the threshold, you need to a get different job,” Harrisburg multi-concept operator Ron Kamionka told the website PennLive.com.

The threshold is currently $30 a month.

Tip earners below the new threshold will be entitled to payment of at $7.25 an hour, from their employers, instead of $2.13.

Under other changes made in March to the state’s wage and hour rules, restaurateurs will also need to follow the 80/20 guideline put forward by the U.S. Department of Labor to determine when a tip credit can be taken by employers. The requirement holds that tipped employees have to be directly paid a full minimum wage when side work or other responsibilities that don’t earn them gratuities exceed 20% of their time on the clock.

The new state regulations will also forbid employers from subtracting processing fees for tips charged on credit cards, and bring the rules on tip pooling in line with federal do’s and don’t’s. In most instances, the national regulations prohibit managers from sharing in staff’s collective tips.

The update also requires restaurants that use a service fee to inform guests that the automatic charge is not a tip.

The changes set to go into effect in Pennsylvania follow a court ruling in Michigan that essentially disallows that state’s tip credit. However, regulators there have not indicated when they will begin to police the revision, which sets a $12 an hour minimum wage for all employees.

On Thursday, the Service Employees International Union and several related labor advocacy groups held what they described as a briefing to members of Congress on the importance of killing the tip credit nationally.  

A tip credit allows employers of workers who earn gratuities to pay a lower wage if the servers and bartenders make enough in tips to raise their compensation to the minimum mandated by government. Excluding Michigan, seven states do not permit the use of a tip credit.

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