HB 240: "An Act allowing employers to apply tip credit to the state's minimum wage."

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.