All employees working in the United States must earn the federal minimum wage. Some types of employees – including waitstaff – customarily rely on tips as their primary form of compensation. Employers are only required to pay qualifying tipped employees $2.13 per hour in direct wages (or their state’s minimum wage for tipped employees) if they routinely make more than $30 in tips each month.
Employers must follow certain rules when handling tips, and they just must ensure employees receive the applicable minimum wage if they do not earn sufficient tips. Some employers may attempt to exploit tipped employees by stealing or unfairly dividing their earnings.
If you are a tipped employee and believe your rights have been violated, we want to help. At Fair Labor Law, we offer nationwide assistance to employees who have had their tips stolen, reduced, or unfairly distributed. Our tipped employee wage claim lawyer is extensively familiar with the intricacies of state and federal labor laws, and we can leverage our knowledge and resources to advance your case. We are ready to provide you with the seasoned representation you deserve, and our goal is to obtain the maximum compensation available to you.
As a tipped employee, you are still entitled to a minimum wage. Though your employer must provide $2.13 (or the state’s minimum rate for tipped employees) in upfront direct wages, they must also credit you if your tips do not allow you to earn a minimum wage for your shift. In other words, if you combine your direct wages and tips and still do not earn minimum wage for all of your hours worked, your employer must make up the difference.
It does not matter if business is slow, if your employer accuses you of poor performance, or any other factor. At the end of the day, you must receive a minimum wage through some combination of your tips, direct wages, and employer credits. If you are not making minimum wage as a tipped employee, you are likely the victim of wage theft and should immediately contact legal representation.
Some employees will work multiple roles within a single workplace. A waiter at a restaurant might also serve as a host for certain shifts, for example, or a bellhop at a hotel might be asked to occasionally assist back-of-house.
Some of these roles may involve customarily receiving tips, while others may not. Your employer can only provide you with the reduced direct wages for hours worked as a tipped employee. Hours worked in a non-tipping position must be compensated at the applicable minimum wage. If you work for five hours as a waiter and another five hours as a host, you must be paid at least the federal minimum wage for the five hours served as a host. Your employer can only pay the reduced rate for the hours you specifically worked in a tipped position. (Remember, you must ultimately receive at least the federal minimum wage for all hours worked either through tips or employee credits.)
If you are regularly working multiple roles – some tipped, some not – and are not being appropriately compensated, consider reaching out to our team. We can evaluate your situation and explore potential legal options.
Some bosses may claim that they need to make certain deductions from an employee’s tips. In most cases, this is unlawful, but there are certain exceptions.
In some states, managers have the right to subtract a proportionate amount of a credit card processing fee from an employee’s tip. The keyword here is proportionate: The entirety of the processing fee cannot be deducted exclusively from the tip. If a credit card processing fee is 2% of the total charge, for example, an employer can choose to deduct 2% of the employee’s tip and release the other 98%. The tipped employee must still make minimum wage after all deductions have been made.
Very few other deductions are generally allowable. Taxes, COVID-19-related costs, and other claimed miscellaneous expenses cannot be deducted from tips. If your employer takes any type of cut from your tips, document the incident and get in touch with our tipped employee wage claim attorney. We can help you hold your employer accountable and recover what you are owed.
Are Service Charges Considered Tips?
Some restaurants have been increasingly applying mandatory “service charges” to bills, especially for larger parties. These service charges might resemble a tip in that they generally constitute 15% to 20% of the total bill. However, in many states, service charges are not considered tips.
Patrons may choose to leave a tip in addition to the service charge, but funds associated with the charge go straight to the restaurant. Your employer may voluntarily choose to distribute a portion of a mandatory service charge to tipped employees, but they are not legally required to do so. Mandatory service charges are considered tips in certain states, and tipped employees must still ultimately earn the applicable minimum wage when these charges are used.
What Are the Rules for Tip Pooling?
If you are confident in your abilities and regularly earn sizable tips, you may wish to keep your earnings. However, some employers may require tipped employees to “pool” their tips into a single bucket. All accrued tips will then be evenly distributed amongst tipped employees at the end of the shift.
- Employers can require pool tipping, but there are limits to who can be included in and benefit from the pool. Managers and supervisors can never participate in tip pooling and cannot take any tips. Back-of-house staff and other non-tipped employees can only participate if employers are paying everyone the applicable minimum wage. If tip credits are being used, non-tipped employees cannot be included in the pool. Every participating tipped employee must earn the applicable minimum wage once all distributions have been made.
- Our tipped employee wage claim lawyer is committed to fighting wage theft. If you suspect your tips are being stolen or unlawfully reduced, our team at Fair Labor Law can assess your circumstances and determine how best to move forward. We may be able to recover stolen tips, interest, and compensation for other penalties. Our attorney understands each state’s laws governing employee tips and can help you prepare and file a claim with the appropriate agency.
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