As part of the federal response to the Novel Coronavirus outbreak, restaurants are eligible for loans to cover their payroll costs through the Paycheck Protection Program (PPP), which can include tips paid to wait staff. Such loans are then forgiven if certain conditions are met, meaning the restaurant does not have to pay the money back. If a restaurant that has received a loan under this program pays a tipped employee less than 75% of his or her total compensation in the most recent full quarter, however, the forgiven amount is decreased accordingly, meaning the employer has to pay the money back. There is, thus, no reason to pay an employee less than 75% of what he or she was earning before the epidemic, including tips. If a tipped employee is receiving less, depending on the employer’s reporting, he or she may be able to recover the difference along with attorney’s fees. Moreover, an employer is highly incentivized to settle the matter without court involvement because the employer could be forced to pay 3 times the difference, with what does not go to the employee going to the government.
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