The most important aspect of tipping, is that servers support the tipping system. When the existing tipping system was threatened by ballot initiatives in Maine, Michigan, and Washington DC, hundreds of tipped employees rallied in opposition and urged the public not to change a system they strongly support. Tipping provides an incentive for exceptional customer service that creates unlimited earning potential for servers. Typically servers earn between $19-25 per hour but many earn significantly more.
No server can ever legally earn less than the minimum wage, period. In every state and city in the United States, servers must earn the minimum wage, and most earn significantly more. 43 states and the District of Columbia allow restaurants to take what is called a “tip credit” where servers are paid a certain amount as a base wage and then earn money in tips. If the combination of the server’s base wage and tips does not meet or exceed the local minimum wage, then the restaurant must make up the difference to guarantee the server makes the minimum wage.
In reality, many servers make much more than the minimum wage and typically earn between $19-25 per hour with some earning significantly more. The tip credit system incentivizes servers to deliver excellent service, enables customers to reward servers for great service, and allows restaurants to keep labor costs in check.
The Fair Labor Standards Act provides strong protections to ensure that tipped employees never earn less than the applicable minimum wage. Restaurants face significant penalties and legal repercussions if they do not ensure that their employees are earning the applicable minimum wage. Employers must meet the following conditions in order to claim any tip credit: