How long can an employer withhold tips

Employees in these states must receive the full state minimum wage from their employers. To find out what's allowed in your state, see our page on state laws for tipped employees. Under federal law, employers can require employees to participate in a tip pool or otherwise share their tips with other employees.

In a tip pool, employees have to chip in a portion of their tips, which are then divided among a group of employees. However, federal law prohibits employers from keeping any portion of the tips or from including supervisors or managers in the tip pool. This is true regardless of whether the employer takes a tip credit or pays employees the full minimum wage. For a long time, there was a debate about whether employees could be required to share their tips with employees who did not regularly receive tips.

For example, some employers include all employees in a tip pool, which allows "back-of-house" staff—such as cooks or dishwashers—to receive a portion of the tips left for servers, bartenders, and other employees who interface with customers.

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. However, employers that do take a tip credit must limit the tip pool to employees who customarily and regularly receive tips. Tips belong to the employee, but can employers ever make any deductions from an employee's tips?

This issue commonly comes up with credit card processing fees. When a customer leaves a tip for an employee on a credit card, can the employer deduct the credit card processing fee from the tips? Federal courts and the Department of Labor have generally held that employers may subtract a proportionate amount of the processing fee from an employee's tips, as long as the employee still receives minimum wage.

However, some states have more restrictive laws. In California, for instance, employers may not deduct any portion of the credit card processing fee from the employee's tips. What about those mandatory service charges often tacked on to bills for large tables of diners, private parties, and catered events? Under federal law and in most states, this isn't considered a tip. Even if the customer thinks that money is going to you and doesn't leave anything extra on the table, your employer can keep any money designated as a "service charge.

Many employers give at least part of these service charges to employees, but that's the employer's choice—employees have no legal right to that money. A couple of states have different rules, however, intended to make sure customers know what they're paying for. For example, New York's highest court has held that companies must give all mandatory service charges to their employees unless they make it clear to customers that the company is keeping the money.

Therefore, your employer can require that you share your tips with other staff that provide service in the restaurant so long as the employees that share in the tip pooling policy are employees to whom the tip was paid, given, or left for.

In this regard, the courts have validated policies that distributed tips among employees who provide "direct table service" or who are in the "chain of service" provided that employee in the chain of service bears a relationship to the customers' overall experience. Are the tips I receive considered part of my "regular rate of pay" for overtime calculations? Since tips are voluntarily left for you by the customer of the business and are not being provided by the employer, they are not considered as part of your regular rate of pay when calculating overtime.

No, a tip is a voluntary amount left by a patron for an employee. A mandatory service charge is an amount that a patron is required to pay based on a contractual agreement or a specified required service amount listed on the menu of an establishment.

An example of a mandatory service charge that is a contractual agreement would be a 10 or 15 percent charge added to the cost of a banquet. Such charges are considered as amounts owed by the patron to the establishment and are not gratuities voluntarily left for the employees. Therefore, when an employer distributes all or part of a service charge to its employees, the distribution may be at the discretion of the employer and the service charge, which would be in the nature of a bonus, would be included in the regular rate of pay when calculating overtime payments.

Your employer can neither take your tips or any part of them , nor deduct money from your wages because of the tips you earn. Furthermore, your employer cannot credit your tips against the money the employer owes you. My employer pays me less than the minimum wage because he includes my tips in my hourly pay.

Unlike under federal regulations, in California an employer cannot use an employee's tips as a credit towards its obligation to pay the minimum wage. California law requires that employees receive the minimum wage plus any tips left for them by patrons of the employer's business. You can either file a wage claim with the Division of Labor Standards Enforcement the Labor Commissioner's Office , or you can file a lawsuit in court against your employer in to recover the lost wages.

Additionally, if your employer is crediting your tips against your wages, you are being underpaid your wages and thus, if you no longer work for this employer, you can make a claim for the waiting time penalty.

After your claim is completed and filed with a local office of the Division of Labor Standards Enforcement DLSE , it will be assigned to a Deputy Labor Commissioner who will determine, based upon the circumstances of the claim and information presented, how best to proceed. Initial action taken regarding the claim can be i referral to a conference, ii referral to a hearing, or iii dismissal of the claim.

Recommended for you Read Your guide to Employment Standards Act to learn more about tips and gratuities. For example: by federal or provincial law for things like income tax, Employment Insurance and Canada Pension Plan CPP contributions deductions from tips to be paid to a third party for things like child support or alimony Definitions Tip or gratuity Under the Employment Standards Act, , a tip or other gratuity is any: voluntary payment left by a customer for an employee or group of employees voluntary payment left by a customer for the employer to give to their employee s service or other similar charge or fee imposed by the employer e.

Best practices in the workplace For employees Track how much you pay into tip pools Track the tips you receive, including the amount you receive from a tip pool For employers Establish a clear policy for handling tips and tip pooling, including: when tips paid electronically e.

Marie, ON P6A 6V4 If you file your claim: online - you will immediately receive your claim number and a letter that confirms that you filed a claim via email by fax, in person or by mail - you will receive a letter in the mail with the claim number Once a claim has been filed, it is reviewed. Share facebook twitter Print.