Tips are monetary sums that are added in addition to, or “on top of” the regular charges for services. For instance, in the restaurant industry, it is common for patrons to pay the waiter anywhere from 10-15% of the food bill, as a way of saying “thank you” and expressing gratitude for good service.
Tips are often associated with employees in the service industries, particularly waiters and bartenders. Other sectors that involve tipping include hotel services, taxis, salons, and golf courses. Federal laws require all employees who make over $20 in tips a month to declare their tip earnings, which will be included as taxable income. The Fair Labor Standards Act is the main federal law governing tip practices; state laws also apply.
Note: The law on tips and gratuities can differ drastically depending on the state; below are some general points and issues to consider when dealing with tips and gratuities laws.
Can Employers keep a Portion of a Worker’s Tips and Gratuities?
The general rule is that all tips the workers. Thus, employers cannot require workers to pay them a blanket percentage of all tips collected.
However, there can be a few exceptions to this. For instance, in some states, employers can count the employee’s tips toward their hourly wages. This is not allowed in all states; you may wish to check your state’s laws regarding these types of “tip credit” practices.
What Are Some Other Points to Consider?
Here are some other points to consider:
- Mandatory service fees are not tips; tips are voluntary given by the customer. As such, mandatory service fees are treated like other charges and are not included in the calculation of the employee’s tips. These may include credit card fees, table service charges, and other fees.
- Minimum wage interactions- Some states such as California require the employee pay the worker a full minimum wage, regardless of how much they receive in tips. In other states, some employers may factor in the worker’s tips in the employee’s hourly pay.
- “Tip pools” are where the workers must pool together all the tips and distribute them evenly for the workers of that shift. Some states allow this, while others don’t. Some states exclude certain workers from tip pools, such as cooks and dishwashers
When it comes to tips, you should realize that the law in one state might be the exact opposite of what another state requires. If you have any questions or disputes, you may need an employment lawyer for advice or representation in court. Your attorney can provide legal representation, especially where there have been major losses or serious violations of worker’s rights. Your lawyer can help you file a lawsuit and can help determine your legal rights.