Many workers may not be aware that they are classified as a “tipped employee.” By federal law, under the Fair Labor Standards Act (FLSA), a tipped employee is any worker that receives more than $30 in tipped compensation on a monthly basis. It’s important that tipped employees understand that the compensation they earn through tips is their property and not the property of their employer. However, there may be a few exceptions to this rule.
Tip pools are common in the service industry as a way to collectively combine the compensation made from tips and “spread the wealth” among all tipped employees within that business. However, this process is often performed incorrectly when non-tipped employees receive compensation as well. For example, servers and bartenders should always be included in a restaurant tip pool. However, in some cases, non-tipped employees like kitchen staff are included as well. This is a violation of the law.
In Florida, a tipped employee is entitled to be paid a minimum hourly wage of $5.23; whereas, the state’s minimum wage for non-tipped employees is $8.25. Under the Federal Insurance Contribution Act (FICA), the employer can compensate their tipped employees the state minimum wage of $8.25 and apply tip credits to the employee. If the employer takes a tip credit, they would have the right to collect the difference between the typical tipped employee’s hourly rate of $5.23 and the minimum wage obligation of $8.25 meaning they could collect up to a maximum credit of $3.02 per hour.
Protect Your Overtime Compensation
In some cases, the employer may make a claim for compensation pertaining to overtime tip credits as well. They may or may not be entitled to this compensation depending on the circumstances of the case. This is one of the many reasons why it’s important to seek the counsel of a Tampa overtime attorney.
It’s also important for employees to closely review their paychecks to ensure they are compensated for the hours they worked. This includes the standard time-and-a-half they should receive after working 40 hours in a week. If the employer takes the tip credit, the employee should be compensated overtime based on the state minimum wage of $8.25.
For more information on tipped employee wage violations, please read part two of this article.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.