Massachusetts: New Guidance for Calculating Wages for Tipped Employees

The “Grand Bargain” added a clause to the service rate statute stating that an employer shall calculate the “amount required by clause (2) at the completion of each shift worked by the employee.” The Massachusetts Attorney General’s office recently released additional guidance on what this means.

Specifically, at the end of each shift, employers must compare the employee’s tips plus regular wage to the minimum wage to ensure that the employee has earned at least minimum wage for that shift, and pay the minimum wage rate if there is a shortfall in the next regular paycheck. Employers should note that the calculation is reviewed on a shift, not day, basis, and tips earned on one day cannot offset minimum wage shortfalls on other days. As of January 1, 2019, the minimum wage in Massachusetts is $12.00 per hour with a service rate of $4.35 per hour.  The service rate can be applied to any employee who earns more than $20 in tips per month.