The law has always included consideration for this loophole. Every employee must at least average state minimum wage for their 80-hour paychecks, including tips.

So the employee has to record their tips (often but not always, in the same computer system they record their hours) and make sure their employer correctly compensated them for the shortfall between actual earnings and minimum wage.

Minimum wage laws basically says “Every employee must make the minimum wage when tips and employer payments are combined. Also, employers must always pay at least $2.13/hr (federal) regardless of amount that is earned in tips.”

The “real” issue is that $2.13/hr combined with averaging earnings over a paycheck leads to very very mismatched incentives for a business deciding what hours they should be open. The business has very low marginal cost so they’ll stay open during hours when it’s not profitable to the laborers because not enough customers ever walk in to make them minimum wage during those extra off-peak hours.

There was a class action suit regarding servers not being paid a full wage while being made to roll up silverware and napkins and other tasks like that where they were on the clock but not able to earn tips. My wife worked at Applebees and got a couple bucks out of this lawsuit.

This sounds like the same thing.

What the businesses I saw this at did was the waitstaff worked the tables part the time and prepped take out orders part the time. So in effect delivery workers were stealing time they could use to wait tables or directly serve a takeout customer that would usually tip them something. It wasn't that they had staff just for takeout that wasn't getting paid regular wage.

Naturally the waitstaff super resented having to maybe take on less tables to do essentially unpaid work on the side of taking your order, prepping utinsels and drinks, possibly even making some very simple ready made stuff themselves, and plate bagging it up etc and a lot of the shit they have to do for a normal table except for no tip.