If You Work as a Tipped Employee, Know Your Rights

The wage and hour laws have very specific rules about payment of tipped employees. These laws are sometimes supplemented by state rules that are even stricter. The rules apply to employees who typically earn more than thirty dollars in tips during a workweek. An employer is permitted to count tips toward an employee’s salary, but no matter how much the employee earns in tips, she must also receive a minimum per hour in direct wages and payments from her employer. That minimum payment is then added to amounts earned as tips, to calculate the hourly rate. In other words, the employer gets a “tip credit” for the difference between the amount that was actually paid, and the amount that is really owed to the employee. But the credit (in other words, the tips) must be enough so that when added to the amount paid by the employer, all minimum and overtime requirements have been met.

The math in these cases can sometime be a little bit confusing and so it is important to speak with a lawyer if you are a tipped employee who believes that your employer is not making proper payments. For example, a tipped employee who makes a lot of money in tips (even as much as hundreds of dollars per hour in tips, as an example) is still owed a minimum cash payment by her employer. An employee who is paid a set amount per hour but does not earn enough in tips to cover the required amounts to be paid under the law, is owed more money from her employer. The way these laws work in practice can be complicated and can vary from state to state. Any employee who thinks that she may not be getting paid correctly should consult with a lawyer to discuss the particular situation.