Employers may violate laws related to tip pooling, tip credit, and other areas related to tipped employees’ compensation
Who qualifies as a tipped employee?
Tipped employees customarily and regularly receive more than $30 per month in tips. In general, tips are property of the employee. Employers are prohibited from using an employee’s tips other than to count towards a tip credit (more information on a tip credit can be found here) or in a valid tip pool. However, only tips actually received by employees may be counted in determining if an employee is a tipped employee and when applying the tip credit.
What is a tip pool?
A tip pool is an exception to the requirement that employees must keep all of their tips. Tip pools are arrangements that share tips among employees who customarily and regularly receive tips, such as waiters, waitresses, bussers, and bartenders. Valid tip pools may not include employees who do not customarily and regularly receive tips, such as janitors, cooks, chefs, and dishwashers.
Under the FLSA, there is no maximum contribution or percentage for valid tip pools. However, employers must notify tipped employees of any required tip pool contribution, may only take a tip credit for the amount of tips each tipped employee ultimately receives, and may not retain any of the employees’ tips.
Tipped employees must retain their tips.
A tip is the property of the tipped employee with the exception of a valid tip pool arrangement. The FLSA prohibits any arrangement between an employer and its employees in which any portion of the tip received become the employer’s property. This is true even where a tipped employee is paid the full amount of minimum wage.
Tipped employees must receive a tip credit notice.
Employers who pay tipped employees less than full minimum wage take a tip credit against the full minimum wage to pay the employees something less. For example, if the minimum wage was $10.00 per hour, but an employer paid an employee who customarily and regularly received tips $5.00 per hour, the employer would be taking a tip credit of $5.00 for each hour worked. Before employers can enjoy the substantial benefit of taking a tip credit, they are required to provide tip credit notice as more fully explained here.
Tipped employees working in dual jobs may be entitled to full minimum wage.
Where a tipped employee works in two separate positions, the employer cannot take the tip credit for the position in which the employee does not make tips. In cases where tipped employees spend time performing non-tipped duties related to the tipped occupation, such as cleaning and setting tables, making coffee, occasionally washing dishes, the employer may still take the tip credit for all times so long as the employee does not spend more than 20 percent of the workweek performing non-tipped duties. If they employee spends more than 20% performing non-tipped duties, then the employee is entitled to full minimum wage for that time.
Contact our office for a FREE consultation with an Ohio FLSA Lawyer if you have questions about your compensation as a tipped employee.
If you have issues related to your tipped compensation, including about a tip pool or any other issues related to your tipped compensation, then you may have a claim for unpaid wages. If you have questions about your tipped wages, then you should contact our office today to speak with an Ohio FLSA Lawyer. You may contact our office for a FREE consultation with an Ohio FLSA Lawyer by filling out the information below or calling 1-614-949-1181.