• LinkedIn
  • YouTube
  • Twitter
  • Facebook
  • Google+

New tip rules: Prepare for a deep dive into the tip pool

Get PDF file

by on
in Compensation and Benefits,Human Resources

Employers have long been allowed to pay tipped employees less than the usual minimum wage. In some industries, tips have traditionally been pooled, so “back-of-the-house” staff can share in customers’ generosity.

But the informality of tipping means it is a surprisingly complicated wage-and-hour issue.

THE LAW The Fair Labor Standards Act requires paying workers the federal minimum wage of $7.25 per hour. However, tipped employees may take a $5.12 tip credit as long as wages paid and tips received by the employees add up to $7.25. Employers are not required to use the tip credit. In fact, some states do not allow employers to use the tip credit.

Federal rules prohibit employers from using the tip credit if the employer retains any tips or if the tips are redistributed to workers who do not customarily and regularly receive at least $30 per month in tips, such as cooks or dishwashers.

WHAT’S NEW For employers wh...(register to read more)

To read the rest of this article you must first register with your email address.

Email Address:

Leave a Comment