Food truck tip laws, or “guidelines,” are established by the U.S. Department of Labor through the FLSA (Fair Labor Standards Act). Essentially, the Department of Labor establishes standards that all food trucks and restaurants must adhere to regarding minimum wage and overtime pay.
If you have a food truck employee who you pay on a weekly salary basis, as opposed to hourly, that employee is considered exempt from minimum wage and tip regulations. But in the case of food trucks and other food service employers, most employees are what is classified as non-exempt. This means you must pay them, and treat their tips, in accordance with FLSA guidelines.
How Food Truck Tip Laws Work
Food truck owners must see to it that their tipped employees earn at least the federal minimum wage (which is currently $7.25 an hour). But how you arrive at that $7.25 figure is where the tip credit comes in. Let’s say that your food truck employee earns tips as part of their job (tipped employees are defined as those who customarily and regularly receive more than $30 per month in tips).
Food truck tip laws permit you, the food truck employer to take a “tip credit” toward your minimum wage obligation for tipped employees equal to the difference between the required cash wage (which must be at least $2.13) and the federal minimum wage. Thus, the maximum tip credit that you can currently claim under the FLSA is $5.12 per hour (the minimum wage of $7.25 minus the minimum required cash wage of $2.13).
But what if an employee works in both a tipped and a non-tipped capacity, such as a line cook and window service attendant? The tip credit is available only for the hours spent by the employee in the tipped occupation.
So how are you supposed to handle tips that are charged on a credit card? You must pay the credit card company a percentage on each sale, and the employer may pay the employee the tip, less that percentage.
Do you have tipped employees in your mobile food business? Have you had to deal with food truck tips laws? We’d love to hear your thoughts on the topic. You can share them in the comment section below, Tweet us or share them on our Facebook page.