As of January 1, 2019, the new minimum wage in Massachusetts is $12 per hour for non-tipped employees and $4.35 per hour for tipped employees who make more than $20 per month. However, employers need to be aware of an important caveat with regard to the latter category: under the new law, employers must ensure that each tipped employee earns the equivalent of $12 per hour for each shift the employee works. In addition, all tips must be retained by the employee or distributed through a valid tip pool. If the employee’s combined wages and actual tips do not total at least $12 per hour, then the employer is required to make up the difference.
Restaurants and other businesses that employ tipped workers should bear in mind that most payroll software and service providers are not yet equipped to make these calculations automatically. This means employers may need to make manual payroll calculations in order to comply with the new law until such time as their service providers are up to speed. (The Massachusetts Attorney General’s Office has published pay and recordkeeping tips to aid with compliance.) Failure to make payments in accordance with the law could put your business at risk of litigation.