For many workers, tips are their primary source of income – waiters, waitresses, servers, bartenders, and valets, for example. You will likely be considered a tipped employee is you customarily and regularly earn more than $30 each month in tips.
If you are a tipped employee, your job can pay tipped employees less than minimum wage. However, the Fair Labor Standards Act (“FLSA”) and Ohio wage laws sets out several rules that employers must follow when employing tipped workers. Under the FLSA and Ohio laws, your employer can take a maximum tip credit against minimum wage. While the FLSA provides that an employer can take up to a $5.12 maximum tip credit against the federal minimum wage of $7.25, Ohio law requires employers that have at least $297,000 in gross sales to pay a minimum wage of $8.10 per hour while taking only a $4.05 maximum tip credit. This means that most tipped employees in Ohio must be paid a minimum cash wage of $4.05 per hour as long as your tipped income makes up the full difference up to least to the level of the federal and state required minimum wages.
Now, your employer can only take the tip credit for work that you are doing in a historically tipped role. For example, if your boss makes you come in on a Saturday morning before the restaurant opens to polish the silver or scrape gum of the bottom of tables (why do people do that?), you should be paid at least the full minimum wage.
Importantly, your job can only apply tips that you actually got toward the tip credit applied to minimum wage. So, if you are working in a slow diner and only got $10 in tips over a five hour shift, your job can only take a $2 per hour tip credit – meaning your job has to pay you the minimum hourly wage less $2 per hour for all hours worked.
While tips may be used in some circumstances as a credit towards your employer’s obligation to pay you minimum wage obligation, your job cannot use your tips for any other reason, with the possible exception of making you pay credit card fees on your tips. Your tip is exclusively your property. The FLSA expressly makes it unlawful and will void any contract or agreement between an employer and a tipped employee agrees to share any portion of the tip with the employer or owner of the business. For instance, even in situations where an employee is paid the full minimum wage, there can be no agreement or other arrangement where the tipped employee has to turn over any portion of tipped income to the employer or owner of the company.
Now, that being said, the FLSA legal requirements that tipped employees must retain all their tips does not prevent your job from setting up a tip pooling, but the tip pool also has requirement to be allowed. Under these requirements, your boss/job must: (1) notify you and all tipped employees of any required tip pool contribution amount; (2) just like straight tips, can only take the tip credit against minimum wage for actual tips that you ultimately get; and (3) just like straight tips, cannot keep any of the tips from the tip pool. If you have to share money from the tip pool with any typically non-tipped employees such as cooks, dishwashers, managers or even the owner, the tip pool becomes invalid and your employer cannot take a tip credit at all. This means that you would be entitled to the full minimum wage in your paycheck, and would still get to keep all of the tips that you kept.
If you are a tipped employee, make sure you know your rights so your employer is not in violation of the FLSA. If you find yourself saying any of the following, you should call a wage and hour attorney immediately about a possible wage theft claim:
- My boss is stealing my tips.
- My manager is sharing in our tip pool at the restaurant.
- I have to share my tips with the cook.
- I was forced to pay for dine and dash losses out of my tips.
- The restaurant that I work at makes me do an hour of kitchen prep work before and after my serving shift but still pays me at server rate for those hours.
- The owner of the bar that I work at tends bar and takes tips out of the tip pool.
- My supervisor makes me give tips to the dishwashers.
- I’m not making minimum wage even after I get all my tips.
- What should I do if my job says I got more tips than I actually got?
- My paycheck is wrong.
- I don’t get to keep all of my tips.
Thus, an employer cannot make any deduction based on a dine-and-dash, breakage, or any other reason that results in the employee’s wages being less than minimum wage for the given pay period. The restaurant or bar cannot avoid a violation even if the employee’s tips were high enough to still keep their full pay rate at or above minimum wage after the employer makes a deduction based on a dine-and-dash. The simple principle here is that under federal law, tips belong to the employee, not the employer.
Are you a waiter, waitress, server at restaurant that depends on tips to live? Know your rights as a tipped employee. If your employer has committed any of the above violations or if you have any other questions about how the FLSA applies to tipped employees, contact the Employment Law attorneys at The Spitz Law Firm for a free initial consultation. If you believe that your employer is not paying you all of your wages for all of your lawfully earned compensation or is keeping your tips in violation of the Federal Fair Labor Standards Act or Ohio Fair Labor Standards Act, contact the attorneys at The Spitz Law Firm today for a free and confidential initial consultation. The wage and hour lawyers at The Spitz Law Firm will provide you with the best options for your pay dispute situation. If you even think that you may be entitled to overtime pay that you are not being paid, call for a free consultation. Call our Cincinnati attorneys at (513) 818-3688. Call our Cleveland attorneys at (216) 291-4744. Call our Columbus attorneys at (614) 335-4685. Call our Toledo attorneys at (419) 960-5926.