Can an Employer Take Away Their Employee’s Tips?

Written by Ravi Sattiraju on November 21, 2017

A tipped employee is defined as someone who “customarily and regularly receives more than $30 per month in tips.” Such an employee needs to receive tips frequently, but not necessarily constantly. This makes bartenders, bellhops, and waiters tipped employees. An employer in New Jersey cannot take away such an employee’s tips and is prohibited from taking these tips away because those tips are the property of the “tipped employee”. Unless the tips are being used either as a tip credit or as part of a valid tip pool. Therefore, if your employer in New Jersey is taking away your tips, you need to contact a New Jersey Wage Discrimination Lawyer.

Tip Credit

In New Jersey, tipped employees are entitled to the minimum wage, but employers of tipped employees can pay their employees a minimum of $2.13 per hour instead of the usual $8.44 per hour if the employees are making at least $8.44 per hour with tips. That difference between $8.44 per hour and $2.13 per hour (the amount the employer does not have to pay the employee) is called the tip credit. So an employer in New Jersey can claim a maximum of $6.31 per hour in tip credits.

The tip credit still can’t just be taken away from an employee. Even if an employee makes more per hour than the minimum wage, an employer cannot take away any of that employee’s actual tips earned. So if an employee makes $4 per hour in tips, the employer has to pay that employee the minimum $2.13 per hour and an additional $2.31 per hour, which adds up to the minimum $8.44 per hour with tips. Plus, employers are obligated to give tipped employees notice if they intend to use a tip credit.

In New Jersey, only an employee’s combined wage and tips must add up to at least the minimum wage. Although the state’s Department of Labor and Workforce Development “suggests” a minimum wage of $2.13 for tipped employees, it also says the wage rate for tipped employees may be set by the employer.

Tip Pool

Some establishments have an arrangement that involves tipped employees collectively sharing everyone’s tips. Employees in a tip pool pay a part of their tips into the pool and these are then divided among all of the members of the pool. However, employers may only have tipped employees contribute to the tip pool if they receive the full minimum wage.

Only employees who regularly receive tips can be part of the pool. In a restaurant, for example, bartenders and waiters can be part of a tip pool, but managers and chefs cannot join. Importantly, employers can never be a part of a tip pool. They are also obligated to give employees notice of the tip pool.

Contact a Wage Discrimination Lawyer in New Jersey Today

If you feel like you’re employer may not be completely honest in their dealings with employee tips, be sure to contact an experienced wage dispute attorney. They can help you decide what your options are and get the compensation you deserve. Give the team at the Sattiraju Law Firm a call today at 609-799-1266.

Posted Under: New Jersey Employment Law
Tags: