Employees of Hotels and Motels

Employees of Hotels and Motels

The primary function of a hotel or motel is to provide lodging facilities to the general public. In addition, most hotels or motels provide food to guests and many sell alcoholic beverages. These establishments may also earn revenue from other activities such as valet services offering cleaning and laundering of garments for guests, news stands, and renting out rooms for meetings, lectures, trade exhibits, and weddings.

Typical Problems Causing Non-Compliance Include:

  • Employees placed on salary and classified as exempt without regard to the duties performed.
  • Failure to maintain records of, or pay overtime to, non-exempt salaried employees.
  • Failure to record and pay employees for all hours suffered or permitted to be worked.
  • Illegal deductions from pay for items like cash register shortages, uniforms, errors, bad checks, etc.
  • Failure to pay the correct overtime rate to tipped employees, or failure to pay the correct overtime rate that includes all service charges, commissions, bonuses and all other remuneration.
  • Tips not sufficient to make up the difference between the employer's direct wage obligation and the minimum wage; employees receiving tips only; and sharing a portion of tipped employees’ tips with employees who are not eligible because they do not normally receive tips.
Paying straight time for hours worked beyond 40 per week instead of required overtime pay, or averaging the number of hours worked over two or more weeks to avoid overtime pay.


Minimum Wage:
Covered workers must be paid at least the minimum wage, currently $5.15 an hour. Wages are due on the regular payday for the pay period covered. Deductions from wages for items such as required uniforms are illegal if they reduce the employee's wages below the minimum wage or cut into any overtime pay. Tips may be included as part of wages for employees who regularly receive more than $30 a month in tips. However, the employer must pay at least $2.13 an hour in direct wages to tipped employees and make sure that the amount of tips actually received by tipped employees is enough to meet the remainder of the minimum wage (or otherwise pay the difference in wages).

Overtime: Overtime must be paid at not less than one and one-half times the employee's regular rate of pay for each hour worked in excess of 40 a week. A tipped employee’s regular rate for overtime purposes must include the amount of tip credit claimed by the employer, plus the reasonable cost or fair value of any facilities furnished to the employee as allowed by the FLSA (such as the cost of meals), and the cash wages including any commissions and certain bonuses paid by the employer.

Tips: Tipped employees are those who customarily and regularly receive more than $30 a month in tips. If the employer elects to claim a tip credit, the employer must inform employees in advance, advise them of the amount of tip credit to be claimed, and pay them at least the applicable minimum wage when wages and tips are combined. Also, employees must retain all of their tips, except in the case of valid tip pool arrangements.

Records: The FLSA requires employers to keep records of wages, hours, and other items, as specified in the record keeping regulations, 29 CFR Part 516.

Exemptions: Section 13(a)(1) of the FLSA exempts bona fide executive, administrative, professional, and outside sales employees from the minimum wage and overtime pay requirements of the FLSA, if they meet certain tests regarding their job duties and responsibilities and are compensated “on a salary basis” at not less than stated amounts. Further information concerning these exemptions can be found in Regulations, 29 CFR Part 541.