Columbus, Ohio Tip Credit Attorney
LEGAL MATTERS HANDLED PERSONALLY SINCE 1957
The Fair Labor Standards Act (FLSA) requires employers to pay at least the federal minimum wage—currently $7.25 per hour—to their employees. However, employers can pay “tipped employees” less than the minimum wage, provided that certain requirements are satisfied. This ability to pay below the minimum wage to tipped employees is known as a “tip credit.”
What is a tipped employee? A tipped employee is an employee who regularly receives more than $30 per month in tips. If someone is a tipped employee, their employer can pay them below $7.25 per hour—the current minimum wage. As of now, under federal law, employers can pay tipped employees at a rate of $2.13 per hour by applying a “tip credit” to the tipped employees pay rate.
A tip credit should make up the difference (or “bridge the gap”) between a tipped employee’s hourly rate of $2.13 per hour and the federal minimum wage of $7.25 per hour. That means that a tipped employee must receive enough tips to allow his or her hourly rate to rise to at least the minimum wage. If the employee does not earn sufficient tips to bridge this gap, the employer is responsible to pay the difference so that the employee is earning at least the minimum wage.
Under Ohio law, an employer can use a tip credit of up to one half of the state minimum wage. In 2023, the Ohio minimum wage will be $10.10 per hour. That means that, in 2023, Ohio employers will be able to use the tip credit to pay tipped employees at an hourly rate of at least $5.05 per hour. Ohio employers must comply with the higher minimum wage rate. So, in 2023, the lowest hourly rate an Ohio employer can pay a tipped employee while using the tip credit is $5.05 per hour. Importantly, employers are still required to pay overtime for hours worked by tipped employees beyond 40 in a workweek. So, an Ohio tipped employee that has a tip credit applied to their hourly rate who works over 40 hours in a workweek must be paid at least $7.58 per hour—in 2023—for his or her overtime hours worked.
Employers often require tipped employees to pool their tips. In a tip pool, tipped employees combine their earned tips and withdraw a percentage of the total pool. However, to utilize this, the employer must ensure that the tip pool is valid—a requirement employers often violate. This means that under no circumstances may managers or supervisors participate in the tip pool as that is equivalent to employers participating in the pool themselves, and employers may never keep employees’ tips. Employers must also ensure that tipped employees are the only participants in the tip pool, a rule that employers often unwittingly break. However, should an employer wish to allow non-tipped employees to participate in the tip pool (such as dishwashers, valet attendants, etc.), than it may not use the tip credit when paying tipped employees’ wages.
Contact Our Columbus Tip Credit Attorneys
If you or someone you know has a tip credit case, contact Barkan Meizlish DeRose Cox, LLP. Our attorneys can assist you and sort the specifics of your case.
Call us today at 614-221-4221 for a Free Consultation or email us at info@barkanmeizlish.com.
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