Pursuant to the Fair Labor Standards Act (“FLSA”), non-exempt employees are entitled to one-and-a-half times their hourly pay for any hours worked over 40. In Arizona tipped employees may earn up to $3.00 per hour less than the mandated minimum wage (currently $7.90 per hour). Thus, a tipped employee may make $4.90 per hour.
When calculating overtime for a tipped employee, however, the standard hourly rate is no longer applicable. Instead, tipped employees who receive reduced hourly wages are subject to overtime at one and one-half times the applicable minimum wage (currently $7.90 per hour). www.dol.gov. If calculated improperly, an employer may inadvertently be liable for substantial overtime under the FLSA. For example, pursuant to the FLSA an employer is required to pay a tipped employee who works overtime one and one-half the applicable minimum wage, which in Arizona, as of 2014, would be $11.85 per hour. An employer who pays tipped employees overtime at one and one-half times their regular pay ($4.90) would only be paid $7.35 per hour. This is $0.55 less than the current Arizona minimum wage and would result in a shortage of $4.50 per hour. While on its face a $4.50 error may not appear to be significant, it can expose the employer to substantial damages under the FLSA, including liquidated damages, penalties and costly legal fees.
The FLSA is an extremely complex and fact dependent statute. As such, we recommend that you contact an experienced employment lawyer without delay to ensure you are paid all wages due. There are certain timeframes that may apply. Faulkner Law Offices can help you collect earned but unpaid wages.