Are You Missing Out on Tips?

You may have seen a recent popular restaurant reality show episode where waiters and waitresses were being forced to turn all of their tips over to two mean-spirited owners who, as it happened, couldn’t cook or get along with their own customers. While it made for good television, the show didn’t inform viewers clearly that the owners weren’t just being mean; they were breaking the law. Under the Fair Labor Standards Act, a federal law, tips are your property as the tipped employee and not the establishment for which you work.

While you might want to stop reading at this point, you should be aware of some limited exceptions.

Credits Against the Tipped Employee Minimum Wage

New Jersey has a separate minimum wage for tipped employees. The employer may be entitled to a tip credit, the difference between the current state minimum wage of $8.38 per hour and the tipped employee’s minimum of $2.13 per hour. Under no circumstances may your employer take more than $6.25 per hour of your wages as a tipped employee. You should also be aware that if your tips do not exceed $6.25 per hour, your employer must make up the difference to ensure that you are making at least $8.38/hour for your work. You may have heard about a possible raise in the tipped employee minimum wage to $5.70 per hour. If passed, this would not take effect until the end of 2015. This blog will keep you informed should there be any developments.

Tip Pools

You may work in an establishment that has tip pooling. Tip pools are a longstanding tradition in restaurants, hotels, and other service-oriented businesses in which the staff who customarily and regularly receive tips agree to share them based on a mutually agreed upon formula. This arrangement is common and legal. Some practices, however, are not legal. Management and management employees (non-tipped workers) may not share in or demand a share of the tip pool. The tips belong to the tipped employees as a group.

Service Charges

Many businesses include a mandatory service charge (usually about 15%) on their bills. While customers may believe they are tipping you, current federal law doesn’t. As a matter of law, the service charge is not considered an employee tip and it belongs to the business. The business may apply it to your minimum wage or towards overtime, or simply share the service charge with you in addition to your regular wages. If this happens, you should count these as wages and not as tips. Any additional amounts above the service charge given to you by patrons are considered tips and thus your property.

Credit Card Fees

If your tip is left on a credit card, your employer may deduct any credit card processing charges from your tip. They may, however, not deduct any more than the amount actually charged by the credit card company. Other than the deducted amount, the tip on the credit card is your property just as if the customer had left the tip in cash.

Contact a New Jersey Labor Law Attorneys

Know your rights and protect them. If you feel your tips are being withheld improperly by your employer, take action by seeking help from a labor lawyer who can get you results. The law firm of John J. Zidziunas & Associates has a team of New Jersey labor law attorneys available to confidentially review your case. For further information, call 973-509-8500, email, or visit