Did you know?
Your Employer Can’t Do Whatever They Want With Your Tips
If you work in a restaurant, bar, hotel, salon, or any job where tips make up a big part of your pay, there are rules about how tips must be handled.
Tip credits and tip pooling are two often misunderstood parts of employment law. If something about your pay has ever felt off, this may apply to you.
Does this sound like you?
☐ You earn tips as part of your job
☐ You’re paid less than minimum wage
☐ Tips are shared or pooled
☐ Your paycheck is confusing or unclear
If you checked even one of these, keep reading.
What is a Tip Credit?
A tip credit allows an employer to pay you less than minimum wage, but ONLY if your tips make up the difference.
But here’s the part many employees don’t know: Your employer cannot automatically take a tip credit just because you earn tips.
Employers must…
Signs Your Tip Pay May Not Be Right
If your employer is taking a tip credit, any of the following should give you pause:
- No one ever told you a tip credit was being used
- Your hourly rate is below minimum wage, but it was never clearly explained
- Your paycheck doesn’t clearly show how your pay and tips are calculated
- You’re paid a tipped wage while doing cleaning, prep, opening, or closing duties
- Your tips don’t consistently bring you up to at least minimum wage
- Tips are reduced to cover mistakes, shortages, walk-outs, or broken items
- You’re not sure whether you’re being paid correctly—and it’s hard to get a straight answer
What is Tip Pooling?
A tip pool is when tips are shared among employees. Tip pooling is allowed, but only under specific conditions.
How tip pools are supposed to work
Common Tip Pooling Issues
These situations come up often when tip pools are not handled correctly.
- Managers or supervisors receive a share of tips
- Tips are shared with employees who do not regularly receive tips
- You are not told who is included in the tip pool
- Tips are used to cover business costs or expenses
- Tip pool rules change without explanation
- You feel discouraged from asking questions about where tips go
- You do not have a clear understanding of how tips are distributed
What This Means for You
You don’t need to know which rule applies or whether something was done incorrectly.
Tip credit and tip pooling issues often overlap, and small details about how tips are handled can make a difference.
The next step is simply to answer a few questions about your role, how you’re paid, and how tips are shared. This helps determine whether your situation may be worth a closer look.