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5 tips for employees who work for tips

On Behalf of | Apr 6, 2016 | Wage & Hour Laws

Tipped employees are exactly what they sound like, employees who depend on tips for a portion of their salaries. Salon workers, bartenders and restaurant servers are probably some of the best well-known types of tipped workers. What is probably less well known is that workers who regularly receive more than $30 a month in tips are protected by a special set of federal laws.

First passed in 1938, the set of laws known as the Fair Standards Labor Act helps establish and govern employee compensation. Far too many workers who depend on tips for their livelihood are uninformed of their financial rights. Here are five tips for workers who work for tips:

  • Tipped workers must be paid a salary in addition to their tips. If the tips are insufficient to bring the salary up to minimum wage, the employer must pay the worker the difference.
  • The employer must pay the worker either weekly or bi-weekly in accordance with the state’s payday laws. On payday, an employer may not withhold payment of tips that were paid by credit card because the credit card company has not yet reimbursed the employer.
  • Tipped workers are entitled to overtime compensation if they are required to work more than forty hours a week.
  • If employers have a tip pool in place, only certain workers may be included. An employer is never entitled to receive money from a tip pool.
  • Mandatory service charges cannot be used in place of tips. Employers are entitled to keep service charges. If they choose to share all or a percentage of this with their employees, it cannot take the place of a tip.

Far too many employers are either willing to exploit workers uneducated about their rights or are, less frequently, simply unaware of the financial rights of tipped workers. Sometimes the only way to bring about change is to get the law involved. If you or someone you know depends on tips for a living and believes he or she has been shortchanged, consult with a lawyer who specializes in employment law. It is critical to let employers know that tipped workers must be compensated fairly.


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