The Fair Labor Standards Act (FLSA) governs tipping. Preliminarily, all employers must pay employees the minimum wage of $7.25 an hour. However, an employer may credit earnings from tips towards the minimum wage up to $5.12 an hour. In the event tipped employees’ tips carry them over the minimum wage, the employer may only have to pay a wage of $2.13 per hour. However, an employee’s wage may not drop below $7.25 per hour.
An employer may count an employee as a tipped employee when that employee “customarily and regularly” receives more than $30.00 a month in tips.
A tip is an amount given by the customer in gratuity, meaning a tip represents extra payment outside of the service provided. Tips solely belong to the employee. An employer may use a tipping pool, about which the employer must notify tipped employees if used.
Tips may be pooled and distributed to tipped employees (this does not include managers) so long as the employer pays the employee the minimum wage. Further, the employer may credit tips paid out via a pool towards the minimum wage of its employees. An employer may require employees to participate in tip pooling.
Example: Waiters and busboys may split the tips from a table.
Some prohibited tipping pool practices include:
If an employer includes employees in the tip pool who should not be there, the tip credit is lost, often resulting in substantial claims unpaid wages.
Some prohibited tipping practices include:
As stated above, the time to act on a claim of discrimination is limited. If you believe that you have been subjected to race discrimination in the workplace, contact me, a Texas discrimination lawyer, to set up a consultation.
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