The wage payment requirements under the Act for monetary wages
specified under its provisions will be satisfied by the timely payment
of such wages to the employee either in cash or negotiable instrument
payable at par. Such payment must be made finally and unconditionally
and ``free and clear.'' Scrip, tokens, credit cards, ``dope checks'',
coupons, salvage material, and similar devices which permit the employer
to retain and prevent the employee from acquiring control of money due
for the work until some time after the pay day for the period in which
it was earned, are not proper mediums of payment under the Act. If, as
is permissible, they are used as a convenient device for measuring
earnings or allowable deductions during a single pay period, the
employee cannot be charged with the loss or destruction of any of them
and the employer may not, because the employee has not actually redeemed
them, credit itself with any which remain outstanding on the pay day in
determining whether it has met the requirements of the Act. The employer
may not include the cost of fringe benefits or equivalents furnished as
required under section 2(a)(2) of the Act, as a credit toward the
monetary wages it is required to pay under section 2(a)(1) or 2(b) of
the Act (see Sec. 4.170). However, the employer may generally include,
as a part of the applicable minimum wage which it is required to pay
under the Act, the reasonable cost or fair value, as determined by the
Administrator, of furnishing an employee with ``board, lodging, or other
facilities,'' as defined in part 531 of this title, in situations where
such facilities are customarily furnished to employees, for the
convenience of the employees, not primarily for the benefit of the
employer, and the employees' acceptance of them is voluntary and
uncoerced. (See also Sec. 4.163(k).) The determination of reasonable
cost or fair value will be in accordance with the Administrator's
regulations under the Fair Labor Standards Act, contained in such part
531 of this title. While employment on contracts subject to the Act
would not ordinarily involve situations in which service employees would
receive tips from third persons, the treatment of tips for wage purposes
in the situations where this may occur should be understood. For
purposes of this Act, tips may generally be included in wages in
accordance with the regulations under the Fair Labor Standards Act,
contained in part 531. (See also Sec. 4.6(q) and Sec. 4.163(k).) The
general rule under that Act is that the amount paid a tipped employee by
his employer is deemed to be increased on account of tips by an amount
determined by the employer,
not in excess of 40 percent of the minimum wage applicable under section
6 of that Act, effective January 1, 1980. Thus, the tip credit taken by
an employer subject to the Service Contract Act may not exceed $1.34 per
hour after December 31, 1980. (See Sec. 4.163(k) for exceptions in
section 4(c) situations.) In no event shall the sum credited be in
excess of the value of tips actually received by the employee.
[48 FR 49762, Oct. 27, 1983; 48 FR 50529, Nov. 2, 1983]
