Incentives for paying tipped employees the minimum wage, not including tips. (FE)

What it would have done

Summary by the Legislative Reference Bureau, the Legislature's nonpartisan drafting office. It's their wording, not ours.

This bill allows the employer of a tipped employee to retain the state sales taxes that the employer collects during any sales tax reporting period if, during that period, the employer establishes by the employer's payroll records that at least 5 percent of the wages that the employer pays to tipped employees is derived from tips and that the employer pays the tipped employees not less than the minimum wage of $7.25 per hour, not including tips. If the employer retains the taxes for any period for which the employer cannot establish the criteria for retaining the taxes, the employer must pay a penalty to the Department of Revenue equal to $500 for the first violation and 200 percent of the taxes for each subsequent violation. After the third violation, the employer is not eligible for retaining the taxes for 48 months following the date of the violation. The same penalties apply for any subsequent period of eligibility.

Under current law, generally, if an employer of a tipped employee establishes that, when adding the tips received by the tipped employee to the wages paid to the tipped employee, the tipped employee receives not less than the applicable minimum wage (generally $7.25 per hour), the minimum wage for the tipped employee is $2.33 per hour.

Who's behind it

6 senators are its authors⁠. All 6 are Democrats.

8 more lawmakers signed on in support⁠.

What it would cost

State agencies filed a cost estimate. Each opens as a PDF from the Legislature.

• Fiscal Estimate From DOR
• Fiscal Estimate From DWD