Can Your Employer Take Your Tips?


Posted by: Brookside Admin

For millions of employees in the restaurant and bar industry, tips are the main area that separates them from a living wage or living in poverty. Yet, there are still cases where an employer keeps the tips an employee earns. While there have been several higher profile cases where employees have had to take legal action against an employer for taking tips, it still happens. So the question remains, “can my employer take my tips”?

Usually, the answer is a huge “NO”, legally your manager or employer cannot take your tips. However, before you talk with your employer, here are some legal tips to consider:

FLSA – Fair Labor Standards Act

The FLSA, or Fair Labor Standards Act, are the rules that govern wage-related issues for any tipped employee, which includes bartenders, servers, and valets. According to the FLSA, a “tipped employee” is anyone that earns more than $30 a month through tips. These types of employees include bartenders, servers, and valets as well as anyone else that receives tips from customers.

An employer can only use the tips that an employee receives as a credit that will offset the employer’s minimum wage obligation to that particular employee, which is called a tip credit.

What Is A Tip Credit?

There is a difference between what the cash wage (must be $2.13 per hour at the least) and the federal minimum wage. A tip credit is the amount that covers that difference. For example, an employer can only claim a $5.12 tip credit per hour on an employee that is paid $2.13 per hour as a cash wage, according to the FLSA.

However, even if the employer claims that tip credit, the tips themselves are still the sole property of the employee that earned them. There is no type of arrangement that can be made between an employer and an employee where the employer is able to keep any tips earned by the employee.

What Is A Tip Pool?

A tip pool is a common practice among employees throughout the United States, especially in the restaurant and entertainment industry. Even though these are very common, employers do have strict rules they follow on how these pools function. For example, an employer has to give notice to any tipped employee about a required tip pool and the required amount the employee needs to contribute, the employer can only take tip credits, and the employer cannot take tips for any other purpose other than the normal tip pool. Employee also should keep in mind that a tip pool is never supposed to include those employees that do not normally get tips, such as cooks, chefs, janitors, and dishwashers.

What Is A “Service Charge”?

There is a lot of controversy between a “service charge” and a “tip” and sometimes employers use this as a way to keep tips. For a better explanation of the difference between a “tip” and a “service charge”, please see our article “Tips Versus Service Charges: What’s The Difference?”

Of course, every different alleged case of tip theft is different. If you are unsure what to do or have a problem with your tips being taken, contact our office today at (918) 582-2500 to set up a free consultation about your case.

Articles on A-Vlaw.com are not intended to take the place of professional legal advice. If you need legal advice, please contact our offices for a free consultation at (918) 582 – 2500.