00                             HOUSE BILL NO. 240                                                                          
01 "An Act allowing employers to apply tip credit to the state's minimum wage."                                            
02 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
03    * Section 1. AS 23.10.065(a) is amended to read:                                                                   
04            (a)  Except as provided under (b) of this section and as otherwise provided for                              
05       in law, for work performed on or after January 1, 2003, an employer shall pay to each                             
06       employee wages at a rate of not less than $7.15 an hour for hours worked in a pay                                 
07       period, whether the work is measured by time, piece, commission, or otherwise.                                    
08       Except as provided in (d) of this section, an [AN] employer may not apply tips or                             
09       gratuities bestowed upon employees as a credit toward payment of the minimum                                      
10       hourly wage required by this section. [TIP CREDIT AS DEFINED BY THE FAIR                                          
11       LABOR STANDARDS ACT OF 1938 AS AMENDED DOES NOT APPLY TO                                                          
12       THE MINIMUM WAGE ESTABLISHED BY THIS SECTION.]                                                                    
13    * Sec. 2. AS 23.10.065 is amended by adding a new subsection to read:                                              
14            (d)  An employer                                                                                             
15                 (1)  may apply tip credit, as defined by the Fair Labor Standards Act of                                
01       1938, as amended, to the minimum wage established by this section if, for the pay                                 
02       period on which the employee's pay is based,                                                                      
03                      (A)  the employee reports tips or gratuities to the employer for                                   
04            federal income tax purposes and the amount reported by the employee                                          
05            averages at least $7.25 an hour for the hours worked; and                                                    
06                      (B)  the employer provides written notice to the employee, in                                      
07            advance of the pay period, that the employer may elect to reduce the                                         
08            employee's pay, based on tips and gratuities the employee reports to the                                     
09            employer for federal income tax purposes, by the amount calculated under (2)                                 
10            of this subsection;                                                                                          
11                 (2)  shall determine tip credit when authorized by this subsection by                                   
12       dividing the tips and gratuities received in a pay period that the employee reports                               
13       under (1) of this subsection by the number of hours the employee worked in the pay                                
14       period; tip credit taken under this paragraph may not exceed the difference between                               
15       the minimum wage and $7.25 an hour.