Understanding The Basics Of Tipping

Employees working in the service industry often find themselves earning more money in tips, than they do in wages. However, many of these men and women are not fully aware of their legal rights when it comes to their tips. By making themselves knowledgeable and aware of the basics in regards to tips, tip credits, and tip pooling, they can be sure that they are collecting what is rightfully theirs.

The Basic Rules of Tipping

With any tip earned, the employee should never be required to forfeit any part of the tip to the employer or other employees, unless there is a valid tip pooling arrangement made ahead of time.

While each state has its own set of laws when it comes to tipping, some states do require that the credit card processing charges, when being used to pay for services, will 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, requiring that they be paid the full amount given.

Understanding Tip Credits

In most states, the federal law allows employers to pay their tipped service employees under the required state minimum wage, but only if they employee is receiving enough in tips to make up the difference. This practice is known as tip credits, which refers to the amount that the employer does not have to pay, making the minimum wage, minus the tip credit, the least amount an employer can pay an employee.

Understanding Tip Pooling

Employers are allowed to utilize tip pooling in many states. With tip pooling, employees are required to provide a portion of their tips into a pool, then dividing it up amongst the other employees. It is required, however, that an employee still keep at least the full minimum wage amount they are entitled to, as well as not be required to share their tips with employees who do not receive their own tips.

To learn more about wage and tip laws, or feel you are a victim of wage theft, contact the employment attorneys of Maduff & Maduff.