Can my employer take my tips? | Cohn Lifland Pearlman Herrmann & Knopf LLP
Cohn Lifland Pearlman Herrmann & Knopf LLP
Call Today:

Can my employer take my tips?

dollar-1009324_960_720-768x576.jpgCan my employer take my tips and does my employer have to make sure that I receive enough tips to cover minimum wage?

Under the Fair Labor Standards Act (or FLSA), tipped employees are those who typically receive more than $30 per month in tips. Some examples of tipped employees are servers, bartenders, delivery workers, and doormen.

Tips are property of the employee, not the employer. An employer may, however, use the tips as a credit against its minimum wage obligation. In other words, instead of paying a tipped employee the minimum wage, the FLSA allows an employer to use tips as a "credit" towards its minimum hourly wage requirement equal to the difference between the required cash wage (or "tipped wage") and the federal minimum wage. The current federal cash wage is $2.13 per hour, while the current federal minimum wage is $7.25 per hour. As such, the employer may consider up to $5.12 of the employee's tips towards its minimum wage obligations.

Importantly, states may have varying cash wage and minimum wage requirements in excess of the requirements under federal law. In New Jersey, as of January 1, 2017, the minimum wage is $8.44 per hour. Despite New Jersey's increased minimum wage, its minimum cash wage is the same that is required under the FLSA (i.e., $2.13 per hour). As such, employers may take a maximum tip credit of $6.31 per hour against the minimum wage.

An employer may not claim a tip credit that exceeds the amount of tips actually received by the tipped employee. For example, Jane Doe works the overnight shift at a diner in New Jersey where she is typically paid the cash wage of $2.13 an hour by her employer. On a particularly slow night, she only works for one hour at 3 a.m. before being sent home. In that hour she only receives $1 in tips by a single customer on his omelet order. As a result, she only made $3.13 in that hour. The diner cannot claim the maximum $6.31 as a tip credit. The diner can only claim $1 towards its minimum wage obligations and should make up the difference between the $3.13 Jane received that hour and the state minimum wage of $8.44. Therefore, the diner owes her $5.31.

If you are a tipped employee and believe that your employer is not properly compensating you or have questions about your compensation, contact an experienced employment law attorney at Cohn Lifland.

No Comments

Leave a comment
Comment Information

No Firm In Northern New Jersey Has More Experience Than We Do. Call 201-845-9600 Today To Put Our Knowledge On Your Side.

Email Us For a Response

Contact Northern New Jersey's Premiere Law Firm

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

Cohn Lifland Pearlman Herrmann & Knopf LLP
Park 80 West-Plaza One
250 Pehle Avenue
Suite 401
Saddle Brook, NJ 07663

Phone: 201-684-9695
Phone: 201-845-9600
Fax: 201-845-9423
Saddle Brook Law Office Map

Review Us