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Employment and Wage Laws Related to Tips

A tip jar full of money

Unfortunately, not all workers are paid fairly. Those in the service industry, in particular, tend to be underpaid because they receive two types of compensation: hourly wages and tips. Employers are often confused by tip laws.

A tip is defined as extra money, beyond the total charges of the bill, to compensate workers for their service. A tip can be given in cash, check, credit card or any other form of payment. No matter how a tip is paid for, it must be given to the employee on the next scheduled payday.

Many employers do not understand the laws. They may not pay an appropriate amount of wage or they may force workers to share tips with others. Waiters, busboys, bartenders, entertainers, cab drivers, doormen and laborers are often victims of wage and labor laws. Their employers may take part of their tips, leaving them with a wage below minimum wage. This is against the law.

Who is Considered a Tipped Employee?

A tipped employee is someone who regularly receives at least $30 per month in tips. An employer must pay a minimum of $2.13 per hour in direct wages to tipped employees in order to equal the federal minimum wage. If the hourly wage of $2.13 and the employee’s tips do not equal the federal minimum wage (currently $7.25 an hour), then the employer must make up the difference. This is just a minimum, though, and many employers pay higher wages.

In New York, certain industries in certain areas use tip credits. For example, in New York City, employers with 11 or more employees must pay an $8.65 hourly cash wage and give a $4.35 tip credit so that employees are paid a total of $13 an hour. This varies, though, so it’s up to employers to understand if tip credits apply to them, and if so, which amounts.

Tipped employees are primarily in the hospitality industry, although car wash attendants, hair stylists, parking attendants and doormen are often tipped as well. Fast food employees are typically not tipped.

Tip Pooling

Complicating things further in the service industry are tip pooling laws. Tip pooling is sometimes done in the food service industry to compensate workers who assist in serving customers. Some employers require it, while some workers do it voluntarily. Workers who may be tipped, whether directly or indirectly, include wait staff, bartenders, busboys, counter workers, food runners and hosts. Tip pooling is often done by offering a percentage of all tips to various employees who do not receive direct tips.

Contact New York Employment Law Attorneys

Those in the service industry are often not paid enough by their employers and are therefore left to rely on tips. It is crucial that these workers speak up, so they can receive the compensation they deserve.

If you believe your employer is violating minimum wage and tip laws, contact a lawyer to understand your options. The experienced New York employment law attorneys at Ricotta & Marks, P.C. can help. To schedule your free consultation, call our firm at (800) 240-9269.

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