It is important for employees working in the service industry to make themselves knowledgeable and aware of how tipping works, as well as their rights when it comes to tip credits and tip pooling.
Tipping- Service employees should never be required to forfeit any part of their earned tip to their employer or other employees. This rule can change, however, when there is a valid tip pooling arrangement that has been made ahead of time. Each state does have its own set of laws when it comes to tipping. While some states require that the credit card processing charges, when being used to pay for services, should be deducted from an employee’s tip, there are other states that do not allow for these charges to be deducted from an employee’s tip. Be sure to check with your state’s laws in order to understand if this applies to you or not.
Tip Credits- In most states, the federal law allows employers to pay their tipped service employees under the required state minimum wage, but this is only true if the employee is receiving enough in tips to make up the difference in pay. This practice, which is referred to as tip credits, is the amount that the employer does not have to pay. This allows for the employee to be making the minimum wage minus the tip credit is the least amount they can be paid.
Tip Pooling- Many states allow employers to utilize tip pooling. Tip pooling requires that employees put a portion of their tips into a pool, and then divide it up amongst the other employees. Employees still must keep at least the full minimum wage amount that they are entitled to, as well as not be required to share their tips with employees who do not receive their own tips.
Our experienced employment attorneys have been specializing in wage theft, discrimination, and harassment for more than 20 years. If you feel that you are a victim of wage theft, contact Maduff & Maduff today.