In 2020, the tip credit was subject to a gradual phasing out, which would culminate in the elimination of the tip credit by the end of the year. Effective December 31, 2020, the tip credit for workers covered by the Minimum Wage Order for Miscellaneous Industries and Occupations is eliminated.
The Miscellaneous Industries and Occupations Wage Order covers a variety of workers who are customarily tipped, such as car wash attendants, nail salon workers, tow truck drivers, dog groomers, wedding planners, tour guides, valet parking attendants, hairdressers, golf and tennis instructors, and building door attendants.
The new rules do not affect tip credits in the hospitality industry (hotels, restaurants and catering).
Next Steps for Employers
Employers covered by the Miscellaneous Industries Wage Order should review their pay practices and plan to remove any tip credits being applied to an employee’s wages by December 31, 2020 to ensure that employees are being paid the full minimum wage.