Don't fall into these four common mistakes when paying tipped employees
According to the Department of Labor, a worker qualifies as a tipped employee if he or she regularly receives more than $30 a month in tips. Tips are the property of the employee, so it might be a good idea for an employer to review their payroll policies and be sure not to commit these mistakes:
- An employee does not have any traditional wage and is only paid in tips, which don't add up to minimum wage. In this case, the employer has to give its worker full minimum wage ($7.25 an hour).
- A business is only required to pay a tipped employee $2.13 an hour, but his or her tips aren't enough to cover the difference between that number and minimum wage. The employer must make up that difference.
- Customers walk out, something breaks or the cash register doesn't come out balanced, so the company takes money out of the guilty worker's wages. If these deductions put the employee's wage below minimum wage, it's illegal.
- An establishment uses a tip pool but that leaves some employees with less than minimum wage. A worker must always receive at least minimum wage. If any of their tips are being counted toward that $7.25, those tips can't go into the pool. Also, workers who are not traditionally tipped can not be part of the pool, Nolo advises.
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