Embed / Share - US Department of Labor DJHDQGRXULYLVLRQ HYLVHG XO Fact Sheet ipped Employees Under the F air Labor Standards Act FLSA KLVIDFWVKHHWSURYLGHVJHQHUDOLQIRUPDWLRQFRQFHUQLQJWKHDSSOLFDWLRQRIWKH WRHPSOR
that the tip creditwill not apply to any tipped employee unless the employee hasbeeninformed of these tip credit provisions. The employer may provide oral or writtennotice tipped employeesinformingthem of items 1-5 above. employer who fails to provide the required information cannot use the section 3(m) tip creditand therefore must pay the tipped employee least $7.25 per hour in wagesandallow the tippedemployeekeepall tips received. Employerselecting to use the tip creditprovisionmust be able to show that tipped employeesreceive atleast the minimum wagewhendirect(or cash)wagesand the tip credit amount are combined.employee's tips combined with the employer'sdirect(orcash) wages of leastper hour do not equal the minimum hourly wage of $7.25 per hour, the employer must make up the difference. Retention of Tips: A tip the sole property of the tipped employee regardless of whether the employer takes a tip credit. The FLSA prohibits anyarrangementbetween the employer and the tipped employeewherebyanypart of the receivedbecomes the property of the employer.For example,evenwhere a tipped employee receivesleastper hour wagesdirectlyfromthe employer,the employeemaynot be required to turnover his or her tips to the employer. Tip Pooling: noted above, the requirement thatemployee must retainalltips does not preclude a valid tip pooling or sharing arrangement among employeeswhocustomarilyandregularlyreceive tips. The FLSA does not impose a maximum contribution amount or percentagevalid mandatory pools. The employer, however, must notify tipped employees of anyrequired tip pool contribution amount,may only take a tip creditfor the amount of tips tipped employeeultimatelyreceives,andmay not retainany of the employees'tips for any other purpose. DualJobs: When employee is employed one employer in both a tipped and a non-tipped occupation, suchemployeeemployed both a maintenance person and a waitperson, the tip creditis available only for the hours spent the employee in the tipped occupation.The FLSA permits employer to take the tip credit for some thatthetippedemployee spends in dutiesrelated to the tipped occupation, even though suchdutiesare not themselvesdirectedtoward producing tips.Forexample, a waitperson who spends somecleaningandsettingtables, making coffee,andoccasionallywashing dishes or glassesis considered to be engaged in a tipped occupation eventhoughthese dutiesare not tip producing. However, where a tipped employee spends a substantial amount (inexcess of 20 percentin the workweek) performing relatedduties, no tip creditmay be takenforthe spent in suchduties. Service Charges compulsory chargefor service, for example, 15 percent of the bill, is not a tip. Suchchargesare part of the employer'sgrossreceipts. Sums distributed to employeesfromservicechargescannot be counted tips received, but may be used to satisfy the employer's minimum wageandovertime obligations under the FLSA.employeereceivestips in addition to the compulsory servicecharge, those tips maybe considered in determiningwhether the employee a tippedemployee andthe application of the credit.WID will not enforce the Department’s regulations on the retention of employees’ tips with respect to any who is paid a cash wage of not less than the full Cair Labor Standards Act (CLSA) minimum wage ($7.25) and for whom their employer does not take an CLSA section 3(m) tip credit. 2 For additionalinformation,visitourandHourDivisionWebsite:http://www.wagehour.dol.gov and/orcallourtollfree informationand helpline,available a.m. p.m.in yourtimezone,8664USWAGE4879243). Thispublicationis for generalinformationandnot to beconsideredin thesame lightofficialstatementsposition containedin theregulations.U.S.Department LaborFrancesPerkinsBuilding200 Constitution Avenue,Washington,866USWAGETTY:8664879243Contact Us U.S.Department LaborWageandHourDivision April 2018 Tipped Employees Standards Act t t W a t wage the employera tipped which must of $2.13 abyarrangementcustomarily FS-15 Credit CardsWheretips arecharged on a creditcardand the employer must pay thecredit card company a percentage on sale, the employermaypay the employeethetip,lessthatpercentage.For example,where a credit cardcompanychargesemployer 3 percentallsales chargedcreditservice, the employermay pay the tippedemployee 97 percent of the tipswithout violatingtheFLSA.However,this charge on the tip may not reduce the employee's wage below the required minimum wage The amount due the employee must be paidlater thantheregular pay dayandmay not be heldwhile the employer awaitingreimbursementfromthe creditcardcompany. YouthMinimum Wage : The Amendments the FLSA allow employers to pay a youth minimum wage of not lessthan $4.25 per hour to employeeswhoare under 20 years of age during the first 90 consecutive calendar daysafter initialemploymenttheir employer.The law contains certainprotectionsfor employees thatprohibitemployersfrom displacing anyemployee in order to hire someone at the youth minimum wage. TypicalProblems Minimum WageProblems: Whereemployee does not receive sufficienttipsmake up the differencebetween the direct(or cash)wage payment (which must be least $2.13 per hour) and the minimum wage the employer mustmake up the difference. Where anemployee receives tips only andis paidcashwage, the fullminimum wage is owed. Where deductions forwalkouts,breakage, or cash register shortagesreduce the employeeswages below the minimum wage,such deductions are illegal.When an employer claims an FLSA 3(m) tip credit, the tipped employee is considered to have been paid only the minimum wage for all non-overtime hours worked in a tipped occupation and the employer may not take deductions for walkouts, cash register shortages, breakage, cost of uniforms, etc., because any such deduction would reduce the tipped employees wages below the minimum wage. Where a tipped employee is requiredto contributeto atip pool thatincludesemployeeswho donot customarilyandregularlyreceive tips, theemployee is owed the full$7.25 minimum wageand reimbursement of the amount of tips that were improperly utilized by the employer Overtime Problems: Where the employer takes the tip credit, overtime is calculated on the fullminimumwage,notthe lower direct(orcash)wage payment.The employer may not take a largerFLSA 3(m) credit for overtime hour thanfor a straighttime hour. Under certain circumstances, anemployer may be able to claim an additional overtime tip credit against its overtimeobligations.Where overtime is not paid based on the regular rate including allservice charges,commissions, bonuses, andother remuneration. Where toObtainAdditional Information
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