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Making Money

A Tip on Minimum Wage Rates

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27 Jul 2011 Print This Post Print This Post

    photo: www.photoxpress.com

    People working in the service industry may be disappointed over their daily wage but it may come as a surprise to them that in the United States, most of the earnings of waiters and waitresses and other service employees come mostly from tips.

    Under US law, or the Fair Labor Standard Act (FLSA), a tip is part of the worker’s wage. Generally, an employer only needs to pay his workers $2.13/hour in direct wages if the worker’s tips plus the $2.13 in direct wages equals at least the federal minimum wage of $7.25/hour. If the tips don’t add up to that amount, then the employer must pay his workers more to make up the difference. How this works can differ across states which may have their own minimum wage laws. See this infographic for more information.

    In the Philippines, wait staff don’t have to rely on tips to make up their minimum wage. Instead, because of Rep. Act No. 6727 (1988) or the Wage Rationalization Act, qualified workers are entitled to a minimum wage, notwithstanding what they receive in tips. Regional tripartite boards conduct investigations and consultations, and issue periodic wage orders to guide employers on the daily minimum wage rate. They are tripartite boards because each board is composed of representative from three sectors: the government, workers, and employers. They are regional because they are located in each of the 16 regions in the country and set minimum wage for their particular region. Thus, each region would have a different prescribed minimum wage.

    The current minimum wage for workers in the NCR region is P426 for non-agricultural workers and P389 for agricultural workers. By way of comparison, the lowest minimum wage is in Region V, where non-agricultural workers should earn P204.00 – P247.00, while agricultural workers should earn P195 to P225, depending on whether they work on a plantation.

    A summary of current daily minimum wage rates can be found at the Department of Labor and Employment website.



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