“Reduced Minimum Wage” Plus Tips

The FLSA requires that employers pay employees a minimum hourly wage. 29 U.S.C. § 201, et seq. Employers of tipped employeesmay consider tips as part of the tipped employees wages, but employers must pay a direct reduced minimum wage if they claim a tip credit. 29 U.S.C. § 203(m).

Requirements to satisfy the “tip credit” in Section 203(m):

(1) the tip credit must be claimed for qualified tipped employees;

(2) the employees must receive proper notice of Section 203 (m) and

(3) all tips received by the employees must be retained by them. 29 U.S.C. § 203(m).

Tipped Employees vs. Non-Tipped Employees

Only tipped employees can participate in a valid tip pool. 29 U.S.C. § 203 (m).

The FLSA defines a “tipped employee” as “any employee engaged in an occupation in which he customarily and regularly receives more than $ 30 a month in tips.” 29 U.S.C. 203(t).