What is the minimum wage I must pay, and how is this different than minimum compensation?

What is the minimum wage I must pay, and how is this different than minimum compensation?

Schedule 2 employers must consider both the Minimum Wage and the Minimum Compensation rates that apply to them. Check Exhibit 5 – Schedule 2 Chart (for 4-23-15 memo) an overview of the annual amounts of these two rates for Schedule 2 employers.

Consider the minimum wage as the total minimum wage the Schedule 2 employer must pay each of its Seattle employees for work performed in Seattle, without consideration of tips or contributions towards a qualifying medical benefits plan.

Consider the minimum compensation as the total minimum amount the Schedule 2 employee must receive by virtue of being employed by you, allowing you to take into account tips and/or contributions towards a qualifying medical benefits plan to make up the difference between the minimum wage and minimum compensation.

EXAMPLE: You are a Schedule 2 employer. Jeff works for you as a server. In 2015, in any given workweek, he averages about $10.00 per hour just in tips. You still must pay Jeff a minimum wage of $10.00 per hour. You can, however, apply his tips towards the $1.00 additional amount required to meet the minimum compensation rate (assuming all of the conditions for using tips have been met, discussed below in Section IV below.)

EXAMPLE: You are the same Schedule 2 employer as discussed in the previous example. Tim works for you, as the dishwasher. You choose to not include him in the tip pool, and he opted out of your qualifying medical benefits plan. You must pay Tim $11.00 per hour in wages, since he cannot apply tips or qualifying medical benefits contributions to the delta between minimum wage and minimum compensation.

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