Employment, Personal Injury, Free Speach Attorney

Tip Pooling & Tipped Employee in KY & OH

Tip Pooling and Tipped Employee Rights under the FLSA

Understanding your rights as a tipped employee is critical if you work in the restaurant, hospitality, or service industry. Many employees rely on tips as a major part of their income, but not every employer follows the law. The Fair Labor Standards Act (FLSA) sets the rules for how tips can be used, when employers can take a tip credit, and who can participate in a tip pool.

At Thompson Legal LLC, we represent employees in Kentucky and Ohio who have been denied wages, had tips taken unfairly, or experienced other wage violations. If you are unsure whether your employer is following the law, this guide explains what the Department of Labor requires.

Who is a Tipped Employee?

Under the FLSA, a “tipped employee” is defined as someone who customarily and regularly receives more than thirty dollars per month in tips. Servers, bartenders, bussers, and other front-of-house employees often qualify under this definition.

Minimum Wage and Tip Credit Rules

Employers may take a “tip credit” toward their minimum wage obligations, but only under specific conditions.

  • The employer must pay tipped employees at least $2.13 per hour in direct wages.
  • The combination of direct wages and tips must equal at least the federal minimum wage of $7.25 per hour.
  • If wages and tips together do not meet minimum wage, the employer must make up the difference.
  • The maximum tip credit allowed is $5.12 per hour.

Employers may only take the tip credit for hours spent performing work that is part of the tipped occupation.

Tip Pooling Requirements

Tip pooling is allowed under the FLSA, but the rules depend on whether the employer takes a tip credit.

  • If the employer takes a tip credit, only employees who customarily and regularly receive tips may participate in the pool.
  • If the employer does not take a tip credit and pays full minimum wage in cash wages, the tip pool may include employees who are not tipped employees, such as cooks or dishwashers.

Employers, managers, and supervisors may never keep tips or participate in a tip pool.

Service Charges and Tips

Mandatory service charges, such as an automatic percentage added to a customer’s bill, are not considered tips under the FLSA. These charges belong to the employer and cannot be counted as tips for minimum wage purposes.

Official Department of Labor Guidance

For more detailed information from the federal government, visit the U.S. Department of Labor Fact Sheet #15 on Tipped Employees

Protecting Your Rights

If your employer has taken part of your tips, included the wrong employees in a tip pool, or failed to ensure that your wages and tips meet minimum wage, you may be entitled to compensation. Federal law gives you the right to recover unpaid wages and, in some cases, additional damages.

At Thompson Legal LLC, we help employees across Kentucky and Ohio fight back against wage theft and tip violations. We understand how important your tips are to your livelihood, and we are committed to protecting your rights.

If you believe your employer has violated tip pooling or tip credit laws, contact Thompson Legal LLC today. Our wage and hour attorneys will review your case, explain your options, and fight to recover the wages you have earned.