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Overtime Laws

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LAWS BY JOB OR INDUSTRY

Tipped Employees

Tipped employees are those who customarily and regularly receive more than $30 each month in tips. Generally, all employees are entitled to be paid federal or state minimum wages. However, an employer may pay a tipped employee a “cash” wage less than the federal or state minimum wages by applying a portion of the employee’s tips toward the minimum wage requirement. This is called a “tip credit.” For example, an employer may pay a tipped employee a “cash” wage of $4.50 and apply a “tip credit” to make up the difference between the cash wage and the minimum wage. However, an employer may only apply the “tip credit” if it informs the employee of the provisions set forth in the following paragraph.

If an employer does not inform the employee of the following tip credit provisions, the employee must be paid the entire amount of the federal or state minimum wage while keeping all of his or her tips.

The Tip Credit Provisions:

Before taking a tip credit, an employer is required to provide the following information:

(1) the amount of cash wage the employer is paying a tipped employee;

(2) the additional amount claimed by the employer as a tip credit;

(3) that the tip credit claimed by the employer cannot exceed the amount of tips received by the tipped employee;

(4) that all tips received by the tipped employee are to be retained by the employee except for a valid tip pooling agreement limited to employees who customarily and regularly receive tips; and

(5) that the tip credit will not apply to any tipped employee unless they have been informed of the tip credit provisions.

If you are a tipped employee that is being paid less than minimum wage but have not been informed of the tip credit provisions stated above, contact an Overtime Lawyer today.

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Diclaimer: The national overtime lawyers and wage and hour attorneys at Mansell Law LLC hold offices and are licensed to practice in New York and Ohio. The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established. ATTORNEY ADVERTISING. Prior results do not guarantee a similar outcome.
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