Requirements for using the tip credit
The Fair Labor Standards Act does not permit employers to take workers' tips for any reason other than than to make up the difference between the required cash wage of $2.13 and the federal minimum wage of $7.25, which is known as the tip credit.
Before employers use the tip credit, they must provide certain information to their tipped workers in either spoken or written form. Specifically, the rate at which cash wage workers will be paid for their employee attendance must be specified at $2.13 or more per hour and the amount claimed as a tip credit should be set at a rate of no more than $5.12.
Additionally, workers must be informed that they are entitled to retain all tips unless they are part of a valid tip pooling arrangement, and that the tip credit claimed by employers cannot exceed the amount they actually receive.
Tip credit provisions will not apply to workers unless they have had the time and attendance regulations explained to them.
A study by the University of Illinois at Chicago found that at least 62 percent of 113 tipped workers surveyed did not earn minimum wage, according to the Chicago Reporter. Employers are required to make up the difference in such cases.
Before employers use the tip credit, they must provide certain information to their tipped workers in either spoken or written form. Specifically, the rate at which cash wage workers will be paid for their employee attendance must be specified at $2.13 or more per hour and the amount claimed as a tip credit should be set at a rate of no more than $5.12.
Additionally, workers must be informed that they are entitled to retain all tips unless they are part of a valid tip pooling arrangement, and that the tip credit claimed by employers cannot exceed the amount they actually receive.
Tip credit provisions will not apply to workers unless they have had the time and attendance regulations explained to them.
A study by the University of Illinois at Chicago found that at least 62 percent of 113 tipped workers surveyed did not earn minimum wage, according to the Chicago Reporter. Employers are required to make up the difference in such cases.
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