Many different types of employees in the service industries receive tips as part of their compensation, including waiters, waitresses, bartenders, cleaning staff, delivery drivers, bellhops, bussers, and others. If you’re a tipped employee, it’s essential to know your rights. Under both the federal and Ohio tip laws, the rule is that tips belong to the employee — not the employer.
The federal and Ohio tip laws can be complex, and it is first necessary to understand what constitutes a “tip” and a “tip credit.” Also sometimes called a “gratuity,” a tip is defined by the federal Fair Labor Standards Act (FLSA) as a sum of money presented by a customer as a gift to recognize a service that was performed for them. Tips are not the same as payment made for the service — they are given in addition to the service charge at the customer’s discretion.
A “tip credit” ensures the full minimum wage required by law is honored for a tipped worker. While a tipped employee may be paid less than the minimum wage, in order to remain compliant with state and federal law, the employer must make up the difference. Specifically, employers who use a tip credit must be able to show that a tipped worker is paid at least the minimum wage when the amount of the tip credit and their cash wages are combined.
If you receive gratuities from customers or clients as part of your employment, it’s important to understand the applicable laws. Unfortunately, many employers either disregard the Ohio tip laws or are not aware of them. Not only must employers pay tipped employees the legally required minimum wage, but they may not wrongfully withhold tips, implement an illegal tip pooling arrangement, or take a tip credit more than half the minimum wage.
Employees who receive gratuities should keep the following Ohio tip laws in mind:
Just because you receive a gratuity from a customer every so often does not mean you meet the legal definition of a “tipped employee.” Under both the federal FLSA and Ohio law, a “tipped employee” is one who regularly receives tips that exceed $30 each month. During a month where you do not receive $30 or more in tips, you are entitled to be paid the full minimum wage.
An employee’s tips and cash wages must equal the minimum wage to comply with the tip credit law. Under this Ohio law for tipped employees, an employer must pay a tipped employee at least half the minimum wage applicable for any given year.
An employee must receive specific notice about their employer’s use of the tip credit system before a tip credit can be taken. A tip credit notice must communicate the cash wage the employee will be paid, the amount of tip credit the employer is claiming, and that the tip credit the employer is claiming cannot exceed the total amount of the employee’s tips. It must also state that all tips are to be retained by the employee who received them unless there is a valid tip pooling agreement — and that the tip credit will not apply unless the employee has been informed of the system.
Tip pooling is a process by which employees who receive gratuities “pool” the total amount of tips received together. Under the FLSA and Ohio law, an employer may require tipped employees to participate in a tip pooling arrangement based on an established formula. However, a valid tip pool may not include any employees who do not typically earn gratuities.
Unless a legal exception applies or there is a valid tip pool in place, an employer may not require an employee to hand over their tips. In addition, a manager, supervisor, or owner is not permitted to retain your tips or take part in a tipping pool.
Tip violations are a common wage claim. If your employer violated the federal or Ohio laws for tipped employees, you may be entitled to take legal action to obtain the compensation you are owed. It’s best to discuss the specific facts and circumstances of your case with an experienced employment law attorney.
Understanding the Ohio laws for tipped employees can be complex. If your employer wrongfully withheld your tips or violated the tip law, it’s vital to have a skillful attorney who can advise you regarding your legal rights and remedies. Located in Westlake and providing reliable representation to clients throughout Ohio, employment law attorney Chris Lalak is dedicated to fighting for the rights of workers who have been denied their rightful wages. Contact Lalak LLC today to schedule a free, confidential, no-obligation consultation and learn how we can help.
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