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Tips on Tipped Employees

September 24, 1998
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Related Topics: Wages and Hours, Featured Article
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Suppose you have an employee who receives tips, but only occasionally. Is he or she a tipped employee in the eyes of the law?

As a rule of thumb, a tipped employee is one who customarily and regularly receives more than $30 per month in tips. Depending on which state you’re in, you may be able to count some of an employee’s tips as part of wages. You must inform the employee in advance, and be able to show that the employee receives at least the minimum wage when tips are combined with wages.

Also, employees must be allowed to keep all of their tips, unless they participate in a valid tip-pooling arrangement.

Source: U.S. Department of Labor, Washington, D.C., August 1998. Contact your state labor department for more information.

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