A tip is an amount of money given to a worker as a gift or gratuity by a customer after the employee has performed some type of service. So, whether you are a waitress, valet, or bar tender, we know that the larger part of your salary is dependent upon your tips. Unfortunately, employers do not always follow the laws laid out for their tipped employees. Some employers even steep as low as to steal tips from their workers. There are many laws and regulations that have been established to benefit tipped workers, which will be discussed in this article.

tipped employee tip left with a checkWhat is the Fair Labor Standards Act?

The FLSA is a federal law that establishes minimum wage rights for all employees, including those workers in service industries who work for tips. This federal law is also supplemented by a Texas state law known as the Texas Payday Law, both of which combine to protect the right to a minimum wage for most workers, overtime pay, equal pay between men and women, as well as limit child labor. The FLSA is an essential law introduced to protect the payment of wages for employees nation-wide.

Know your rights:

If you receive tips as part of your regular wages, you need to know your legal rights. Tips are the property of the employee who earns and receives them, not the employer. Tipped wage workers can not be required to give their tips to the company or be forced to share tips with managers or supervisors.

What is a Tip Credit?

In most states, under federal law, employers may pay tipped employees less than the minimum wage, as-long-as employee’s make enough in tips to make up the difference. This is known as a “tip credit” because the employer counts the employee’s tips towards its obligation to pay minimum wage. Your employers may take a tip credit only if you regularly earn more than $30.00 in tips per month. Under federal law the maximum tip credit allowed is $5.12, so employers can pay tipped employees as little as $2.13 per hour, as long as the employee makes enough in tips to earn at least the current minimum wage of $7.25 per hour.

What is Tip Pooling?

Tip pooling occurs when tipped employees share a portion of their tips, which are then divided among a group of employees such as cooks, dishwashers, and hostesses. This practice, as you can imagine, became a hot topic for debate. Fortunately, in 2018, the Fair Labor Standards Act made an amendment that clarified the issue. This law made clear that employers that do not take a tip credit and pay employees the full minimum wage may establish a tip pool that includes back-of-house employees to receive a portion of the tips left for servers, bartenders, and other employees who serve customers face to face. However, employers that do take a tip credit must limit the tip pool to employees who generally receive tips.

Problems arise when tipped wage employees are forced to tip into an invalid tip pool or do not make enough tips to cover minimum wage. Some employers violate federal law by requiring employees to do work off the clock. It is your right to receive pay for all the hours worked for your employer. If you feel that your employer has been negligent regarding your legal pay, visit our website or contact the legal staff at Scott Law PLLC to help you get the back pay you are entitled to.

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