Under the Fair Labor Standards Act (FLSA), if you regularly earn more than $30 per month in tips you are covered by a minimum wage provision different from employees who don’t earn tip income. Under employee pay laws, your employer is required to pay you $2.13 per hour, and may take a “tip credit” for the difference between the tip minimum wage and the amount remaining to reach the regular minimum wage (currently $5.12). If you do not earn enough tips in a pay period to make up the difference between the tip minimum wage and the regular employee minimum wage, your employer must make up the difference or else they are in violation of employee pay laws. Tips belong to you and not your employer or anyone else, except to the extent you and your fellow tipped employees form a tip pool (into which all tips are deposited and from which they are distributed). Non-tipped employees may not share in the tip pool.
There are numerous issues that can arise with regard to tip income. But consider the following:
You contribute your tips to a tip pool and find out that your employer is distributing some of the pool to non-tipped employees.
When a customer walks out on a bill without paying, your employer deducts the value of their meal from your wage pay. At the end of a pay period, your combined minimum wage and tips are less than the regular minimum wage.
Your employer lets customers use credit cards; but you employer won’t pay you for credit card tips until the credit company pays the bill, even though it is after your next, regularly scheduled pay check.
Your employer deducts the 3% credit card fee from credit cards tips; this leaves your combined wage and tip income below the minimum wage. Your employee does not make up the difference.
Your employer requires you to spend a shift decorating the restaurant for holidays; he pays you the minimum tip wage for this period and takes the full tip credit, even though you earned no tips during that shift.
Your employer maintains an “error account,” into which you are required to deposit a certain percentage of your tips to cover mistakes you might make. This violates the tips are your property rule.
