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DOL rule change may alter how employees are paid

If an employee in New Jersey is considered a tipped worker, an employer may be able to pay a base wage of $2.13 under the Fair Labor Standards Act (FLSA). The other $5.12 per hour may be made up of tips received during a shift. Employers may use the tip credit if the employee is allowed to keep all of his or her tips. It is also possible for employees to share tips that are pooled over their shifts.

This may be added to a full hourly minimum wage paid by an employer. However, this can only be done for those who customarily receive tips. This may exclude cooks or other kitchen workers who don't normally receive tips. A proposed rule change by the Department of Labor may ease this restriction. Proponents say that it provides employers with flexibility to pay their workers more than they would normally receive.

It is important to note that this new rule would only apply to employers that don't take a tip credit. In other words, it would apply to those that would still pay a full minimum wage on top of a share of pooled tips. Regardless, this law may not have much of an effect on employees in states such as California or Montana where they are required to be paid a cash equivalent of the federal minimum wage.

If workers are not paid a proper hourly wage, they may have grounds to take legal action against their employer. Even if a worker receives tips as part of his or her compensation, that person is generally entitled to hourly pay equal to the minimum wage. If a claim is successful, an individual may be entitled to compensation for back pay, interest on the balance owed and other damages.

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