Could a Washington hotel or restaurant count tips and meals toward the state minimum wage in 1974?

Plain-English summary

Washington's AG concluded in 1974 that a hotel or restaurant covered by both state and federal minimum-wage laws had to pay eligible employees the state cash minimum of $1.80 per hour. Federal law allowed credits for tips, meals and lodging, but the AG found that those credits did not reduce the employer's separate obligation under Washington's then-existing law.

“that hotel or restaurant, as an employer, is required to pay its eligible employees at least the $1.80 per hour minimum wage now required by RCW 49.46.020 even though a lesser minimum hourly wage could be paid under the federal act because of the credits for tips, board and lodging that are allowed under that act.” (Official opinion)

Currency note

This opinion was issued in 1974. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Historical summary

Hotel and restaurant employers

For a workplace subject to both laws, the AG applied the state minimum as an independent floor. It interpreted Washington's definition of wages as payment in cash or a cashable check. Meals and lodging supplied in kind therefore did not count toward that state minimum, and the opinion followed the labor department's longstanding exclusion of tips from state wages.

Hospitality employees

The opinion concerned employees eligible under the 1974 state minimum-wage provision. It explained that compliance with a federal rate after credits did not itself satisfy the state cash rate. The dollar amount in this historical opinion was the amount in effect for 1974.

Common questions

Q: Could an employer apply the federal tip credit to Washington's 1974 minimum wage?
A: No. The AG treated tips as outside wages under the state act, even when federal law permitted a credit.

Q: Did employer-provided meals or lodging count toward the state wage floor?
A: No. The AG read the state wage definition as cash or a cashable check and cited a Washington Supreme Court decision excluding in-kind meals and lodging.

Q: What if both federal and state minimum-wage laws applied?
A: The AG said the hotel or restaurant had to meet the more protective state cash requirement despite a lower cash amount permitted under the federal credit rules.

Background and statutory framework

RCW 49.46.020 set the 1974 state hourly minimum at $1.80, and RCW 49.46.010(2) defined state wages as payable in cash or cashable checks. The opinion compared the federal credit rules with 29 U.S.C. § 218 and RCW 49.46.120, which preserved more favorable state standards. It cited State ex rel. Hagan v. Chinook Hotel on meals and lodging.

Citations and references

The opinion discussed RCW 49.46.020, RCW 49.46.010(2), RCW 49.46.120, 29 U.S.C. § 218, and State ex rel. Hagan v. Chinook Hotel.

Source

• Landing page: https://www.atg.wa.gov/ago-opinions/labor-minimum-wage-hotels-restaurants-minimum-wage-hotel-and-restaurant-employees

Original opinion text

Attorney General Slade Gorton

LABOR ‑- MINIMUM WAGE ‑- HOTELS ‑- RESTAURANTS ‑- MINIMUM WAGE FOR HOTEL AND RESTAURANT EMPLOYEES

In the case of a hotel or restaurant that is subject to both the Washington minimum wage act and the federal fair labor standards act, that hotel or restaurant, as an employer, is required to pay its eligible employees at least the $1.80 per hour minimum wage now required by RCW 49.46.020 even though a lesser minimum hourly wage could be paid under the federal act because of the credits for tips, board and lodging that are allowed under that act.

August 15, 1974

Honorable John L. O'Brien
Speaker Pro Tempore
House of Representatives
Joseph Vance Building
Seattle, Washington 98101

Cite as: AGO 1974 No. 18

Dear Sir:

By letter previously acknowledged you have requested an opinion of this office on a question which we have paraphrased as follows:

In the case of a hotel or restaurant that is subject to both the Washington minimum wage act and the federal fair labor standards act, is that hotel or restaurant, as an employer, required to pay its eligible employees at least the $1.80 per hour minimum wage now required by RCW 49.46.020, even though a lesser minimum hourly wage could be paid under the federal act because of the credits for tips, board and lodging that are allowed under that act?

For the reasons set forth in our analysis, we answer this question in the affirmative.

ANALYSIS

A comparison of the relevant provisions of the state and [[Orig. Op. Page 2]] federal acts at the outset will be helpful in obtaining an understanding of the problem here presented.

RCW 49.46.020, as most recently amended by § 1, chapter 9, Laws of 1973, 2nd Ex. Sess., provides that:

"Every employer shall pay to each of his employees who have reached the age of eighteen years wages at a rate of not less than one dollar and sixty cents per hour except as may be otherwise provided under this chapter: PROVIDED, That beginning the calendar year 1974, the applicable rate under this section shall be one dollar and eighty cents per hour, and beginning the calendar year 1975 the applicable rate under this section shall be two dollars an hour."

For purposes of the Washington law, the term "wage" is defined in RCW 49.46.010(2) as:

". . . compensation due to an employee by reason of his employment, payable in legal tender of the United States or checks on banks convertible into cash on demand at full face value, . . ."

The federal fair labor standards act (FLSA), on the other hand (also as recently amended), now sets the minimum wage rate for covered hotel and restaurant employees at $1.90 per hour, but provides that:

"'Wage' paid to any employee includes the reasonable cost . . . to the employer of furnishing such employee with board, lodging, or other facilities, if such board, lodging, or other facilities are customarily furnished by such employer to his employees: . . . In determining the wage of a tipped employee, the amount paid such employee by his employer shall be deemed to be increased on account of tips by an amount determined by the employer, but not by an amount in excess of 50 per centum of the applicable minimum wage rate, except that the amount [[Orig. Op. Page 3]] of the increase on account of tips determined by the employer may not exceed the value of tips actually received by the employee . . ." (29 USC [[U.S.C.]]§203(m).)1/

A "tipped employee," within the meaning of this provision, is defined by subsection (t) of the same section as meaning ". . . any employee engaged in an occupation in which he customarily and regularly receives more than $20 a month in tips."

On the other hand, since the definition of wages for purposes of the state act,supra, is limited to payments in legal tender or by negotiable instrument, the value of any meals (in kind) or lodging provided by an employer cannot be considered in determining whether the state minimum wage requirement is met. State ex rel. Hagan v. Chinook Hotel, 65 Wn.2d 573, 399 P.2d 8 (1965). Likewise, as it has long been administratively construed by the department of labor and industries, tips are also not included as a part of an employee's wages for the purposes of the Washington law.2/

The coverage of the Washington act is, of course, not limited to those businesses that are engaged in interstate commerce ‑ as is the federal act, of constitutional necessity, under the commerce clause of Article I, § 8 of the United States Constitution. See,Peterson v. Hagan, 56 Wn.2d 48, 351 P.2d 127 (1960). However, your inquiry assumes a case in which both acts are applicable. Repeated for ease of reference the question (as above paraphrased) is as follows:

[[Orig. Op. Page 4]]

In the case of a hotel or restaurant that is subject to both the Washington minimum wage act and the federal fair labor standards act, is that hotel or restaurant, as an employer, required to pay its eligible employees at least the $1.80 per hour minimum wage now required by RCW 49.46.020, even though a lesser minimum hourly wage could be paid under the federal act because of the credits for tips, board and lodging that are allowed under that act?

The answer to this question is to be found in a combined reading of 29 U.S.C. § 218 (a part of the federal law) and RCW 49.46.120 (a part of the state act). First, the federal statute states that:

"No provision of this chapter or of any order thereunder shall excuse noncompliance with any Federal or State law or municipal ordinance establishing a minimum wage higher than the minimum wage established under this chapter . . ."

And then, RCW 49.46.120 complements this federal deferral to stricter state or local standards3/ by providing that:

"This chapter establishes a minimum standard for wages and working conditions of all employees in this state, unless exempted herefrom,and is in addition to and supplementary to any other federal, state, or locallaw or ordinance, or any rule or regulation issued thereunder. Any standards [[Orig. Op. Page 5]] relating to wages, hours, or other working conditions established by any applicable federal, state, or local law or ordinance, or any rule or regulation issued thereunder, which are more favorable to employees than the minimum standards applicable under this chapter, or any rule or regulation issued hereunder, shall not be affected by this chapter and such other laws, or rules or regulations, shall be in full force and effect and may be enforced as provided by law." (Emphasis supplied.)

Thus, the federal law permits an imposition of higher state maximum wage standards (but not lower) than those fixed by that law; and our state act, in turn, takes advantage of that permission by providing that its standards are to be read as being ". . . in addition to and supplementary to any other federal, state, or local law or ordinance . . ."

For this reason we answer your question in the affirmative, and trust that the foregoing will be of assistance to you.

Very truly yours,

SLADE GORTON
Attorney General

PHILIP H. AUSTIN
Deputy Attorney General

*** FOOTNOTES ***

1/As amended by Public Law 93-259, 93rd Congress, 2nd Session.

2/This long-adhered to administrative construction by the agency charged with responsibility for administering the state minimum wage law (see, RCW 49.46.010(1)), while not binding on the courts, is entitled to great weight ‑ and for the purposes of this opinion we shall assume it to be correct in the absence of a clear indication of legislative intent to the contrary such as is contained in the federal act, supra. See,Ropo, Inc. v. City of Seattle, 67 Wn.2d 574, 409 P.2d 148 (1965).

3/It was the intent of the framers of the federal legislation to defer to a more stringent state or local standard that might be imposed by such units of government. H. Rept. No. 1452, 75th Cong., 1st Sess., page 10; H. Rept. No. 2182, 75th Cong., 3rd Sess., p. 15. The latitude for state and local action thus afforded has been specifically noted by the courts. Divine v. Levy, 36 F. Supp. 55 (W.D. La. 1940); Maldanado v. IBM Corp., 56 F.R.D. 452 (D. Puerto Rico 1972).