March 7, 2019
The way restaurant owners are required to report and pay their waitstaff has changed. In 2019, Section 27 of the “Grand Bargain” legislation was put into effect. The Grand Bargain addressed three different ballot questions dealing with minimum wage, paid family leave, and the sales tax.
As you all know, restaurants are required to ensure that tipped employees make at least $12 per hour during each pay period. This calculation includes the paid tipped wage of $4.35 per hour plus any tips earned (credit cards or cash). Our software currently provides two methods to “true up” the wage each pay period.
Section 27 states that restaurants must now make sure that tipped employees earn the minimum wage of $12 per hour each shift. In the event that a tipped employee does not make $12 per hour on a given shift, the restaurant must pay out the difference. This additional $ amount may be paid out with the regular paycheck and does not have to paid out at the end of the shift. An example:
A restaurant server works a 5 hour shift on Tuesday and a 5 hour shift Friday. During the Tuesday shift, the employee earns 5 hours @ $4.35 per hour ($21.75) plus $20 in tips. The total service wage is $41.75. The new law calls for the employee to earn at least $60 per shift. (5 hours x $12/hour). The employer must pay out an additional $18.25 in the employee’s next paycheck to make up the difference for the shift.
This change has proven difficult for employers across the state of Massachusetts because POS systems and payroll software’s are not able to calculate minimum wage on a per shift basis, yet. The new law sets the penalty amount for non-payment of wages for each occasion at triple the amount of the weeks entire pay not just the amount of the shift underpayment.
At BizChecks Payroll, it is our mission to keep you informed on the ever-changing state regulations so that you know how to remain compliant.
If you have any questions about the new law, please do not hesitate to contact us.