Effective January 1, 2007, Missouri's minimum wage was increased from $5.15 to $6.50 per hour. The text of the new law, read in context with existing state regulations, left unclear its effect on Missouri employers relying on "tip credits" to satisfy minimum wage obligations.

Until this week, the Missouri Department of Labor and Industrial Relations (MDLIR) had taken the position that the minimum cash wage owed remained $2.13 (as required by federal law), such that employers could take credits for tips to satisfy the remaining portion of the $6.50 per hour owed under the new law. So long as employees earned at least $6.50 per hour including tips, employers only had to pay $2.13 per hour in wages. This interpretation of the new law, however, was criticized by labor groups and some academics.

In response, the MDLIR -- backed by a press release from the governor -- has recently reversed course and has now begun informing employers that the new law only allows employers a credit of up to 50% of the new minimum wage. This means, under the new interpretation by the state agency, employers must pay a minimum cash wage of $3.25 per hour, not $2.13.

There are no reported cases in which a court has yet had to rule on the proper interpretation of the law. Although the MDLIR’s interpretation of the law is not binding on the courts, restaurants and other employers that rely on tip credits to satisfy their minimum wage obligations in Missouri face potential back pay liability if they do not pay a minimum cash wage of $3.25 per hour.