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THE $2.13 SERVER MINIMUM WAGE: EXPLAINED.

Brittany E. Bennett, Esq. • Aug 20, 2021

Get schooled on Tips.

Many believe that the minimum wage for individuals in the service industry is too low or even “illegal.” This is absolutely NOT true. Let's find out why. 

An employer of a tipped employee is only required to pay $2.13 per hour in direct wages if that amount combined with the tips received at least equals the federal minimum wage. If the employee's tips combined with the employer's direct wages of at least $2.13 per hour do not equal the federal minimum hourly wage, the employer must make up the difference. Employers know this as the “Minimum Wage Differential.” Put plainly, Employers must make up the difference between the federal minimum wage and the service minimum wage ($2.13) if the server does not make at least the federal minimum wage. This is reflected and paid on the Employee’s paycheck. 

For example, if Suzie Server makes only $10.00 in tips during a 5 hour shift while clocked in at $2.13 per hour, this means she made $4.13 per hour. Math below.

$2.13 x 5 hours= $10.65
  + 10.00 (tips)
  _____________
  $ 20.65 (total wages for the day)

$20.65 (total wages for the day) ÷ 5 (total hours worked) = $4.13 per hour 

This means that Suzie made BELOW the Federal Minimum Wage ($7.25) and her Employer must pay her $3.12 per hour worked to make up the difference between the amount she made and the Federal Minimum Wage. Here is the math:

Difference between 
Federal Minimum Wage             $7.25-$4.13= $3.12
and amount Suzie made 


Minimum Wage Differential     $3.12 x 5= $15.60

That means Suzie will be paid $20.65 in minimum wage from her Employer plus tips AND an additional $15.60 from her Employer. This equals -- $36.25 for 5 hour shift. This means that Suzie will ALWAYS at LEAST make the Federal Minimum Wage ($7.25x5=$36.25). 

In fact, most servers make far MORE than the Federal Minimum Wage. The average salary for a server in Georgia is $13.55 per hour —that is equal to $108.40 per day. $13.55 is almost twice the amount of the Federal Minimum Wage. Some companies, such as Steak n Shake, have been rated “Top Companies for Servers in Georgia” where servers make approximately $27.63 per hour! That comes out to an annual salary of $53,049.60. This is one of the reasons many college students work as servers while going to school. They can literally pay for college while attending school. This does not even account for those servers who do not report ALL of their tips. Since most tipped wages are in cash directly to the server, some wages go unreported. 

So next time you hear someone claiming $2.13 is not enough for servers—now you know the difference

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