I do not quite understand the general outrage here. I agree it is shitty, but this is not uncommon at all in the wage world.
That is how restaurant employee’s are compensated as well in Michigan.
The minimum wage for servers is something like 2.83/hr and then + tips, they are guaranteed whatever the actual minimum wage is, like 8/hr.
So if 2.83 / hour + tips does not equal 8/hr, the restaurant would make up the difference, so of course the tips are used as part of the amount to determine how much add to get to 8/hr.
Its the law, it works that way. I guess the restaurant could ignore the tips and just pay them 8/hr, but none do that I know of.