Please Note: As of October 2018, Andrew Kimble has formed Biller & Kimble, LLC with his partner Andy Biller to continue his employment law practice. For more information, please visit BillerKimble.com.
Tipped workers are subject to unique federal and state wage laws that allow employers to pay them at a reduced wage rate because they receive tips from customers. However, an employer desiring to pay their employees at “tip credit minimum wage” must meet a number of requirements.
First, an employer must explicitly notify each tipped employee that they intend to pay them at a reduced minimum wage rate. Second, tipped employees’ combined income of wages and tips must satisfy the minimum wage requirements for an employer to take a tip credit. Third, they must ensure that tipped employees are allowed to retain all of the tips they receive, meaning the tips cannot be shared with ownership, management, “back of the house” employees, or anyone else not engaged in customer service. Employers are allowed to distribute tips according to a “tip pool,” but the tip pool cannot include employees who do not regularly receive tips, such as management, cooks, dishwashers, or other back of the house employees. Finally, if a tipped employee spends a substantial amount of his or her time at work engaged in a non-tipped activity (such as cleaning, setting up the restaurant, or closing down a restaurant), employers could be required to pay the tipped employee at full minimum wage for all or a portion of his or her work hours.
Presently, Ohio Constitution Article II, Section 34a requires that tipped workers be paid at least $4.08 per hour for all hours worked up to 40 hours per workweek. Federal law requires that all tipped employees be paid at least $2.13 per hour for non-overtime hours.
Employers are allowed to take a tip credit from an employee’s overtime wages as well. However, for it to be valid, the employer must take the tip credit after applying the overtime premium. In Ohio, this effectively means a tipped employee must be paid at least full minimum wage for each hour worked in excess of 40 per workweek.
If you are a tipped employee and have questions about the wages you are receiving, call Andrew Kimble for a free, confidential consultation today or complete the form below.