The Easy Guide to Pay and Tips: Wages Made Simple

Tipping housekeepers: it makes a difference. But tipping varies between states. Should tipping etiquette?

Housekeeper or hotel owner, you both depend on the success of your hotel. Get each other’s backs; make sure you don’t accidentally break the rules on pay and tips with our quick guide

Tips and pay. It’s complicated. At least, the way it’s usually explained. The internet is full of tip guides for customers, but what about tipping guides for those on the receiving end? Or their employers? Here’s your short and snappy guide to the rules on tips and take-home pay.

How do tips affect wages?

What’s the context of a hotel tip? Across the US, everyone must get paid at least the Federal Minimum Wage. That’s $7.25.

Is that the minimum in every state? No. That’s the smallest amount of money central government will allow states to set as their minimum wage. Some go further. Some don’t.

Tip housekeeping? If they’re on minimum wage, how much your maid earns as a basic wage will vary. How much you tip housekeeping should reflect that.

This is because the state minimum wage varies. A hotel housekeeper in Texas might only get the basic minimum the US government allows – $7.25 per hour.

Meanwhile, their lucky colleague in California could be earning $11 an hour for identical work. This isn’t something guests often think about when deciding how much to tip hotel housekeeping. But they should.

So far we’ve seen that every US employee must earn the minimum wage in the state where they work. This applies whether you earn tips or not.

But can employers count tips towards the minimum age, or is it separate?

Again, it depends where you live. California? No. Tips you earn are all added to your take-home pay on top of your wage, which must equal the minimum on its own. Tip housekeeping? It’s their bonus.

Texas? Your employer can count your tips towards your pay meeting minimum wage. This means they can pay you a wage that is below the standard Federal Minimum Wage but top it up with your tips so you meet the legally acceptable threshold.

So, whether tips can be counted towards achieving the minimum wage varies by state. Whether you are a housekeeper, a hotel employer, or a hotel guest trying to decide how much to tip housekeeping, this is vital information.

The lowest direct wage not counting tips is called the ‘required cash wage’ set out in the Fair Labor Standards Act. It’s currently set at $2.13. This is the federally mandated minimum. You could think of it as a kind of backstop minimum wage for tipped employees.

This required cash wage is much lower than the minimum wage, but it’s still an absolute minimum. And it’s only allowed on the assumption that the difference will be made up with tips.

If you don’t tip the maid in one of the states that allows employers to only pay the minimum cash wage, you could be hurting your housekeeper’s bank balance. Tipping etiquette suggests that to tip housekeeping in these states is particularly valuable.

We’ve already seen two different approaches to the required cash wage and tipping. Texas lets you pay your employees the required cash wage of $2.13 and top up the rest with tips. In California, the state minimum wage applies to everyone. Even if you get tips.

In a state like California where tips are an added bonus on top of a wage, tipping housekeeping is seen a great sign that a guest is happy with the service they’ve received.

There’s also a third approach to tips and pay, which falls somewhere in the middle. Some states don’t insist that you pay the full state minimum wage before tips, but still require you to pay more than the required cash wage of $2.13. New York, Michigan, and Florida are all examples of states following this model.

To see how your state fits in, check the Department of Labor’s website.

Please note that this blog post is just an overview and isn’t meant as financial advice. If you’re in any doubt as to your responsibilities, please consult a qualified professional.

If you’re a hotel manager or owner, we’re interested in hearing from you. We’ve created an online service that makes it easy for staff to receive and record tips. If you’d like to help your housekeepers boost their income and motivation, you can visit tipzyp.com/hotels for more useful information.

 

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