The easiest way to explain a tip credit is by providing an example. For 2018, the minimum wage in Ohio is $8.30 per hour for non-tipped employees. If an employer wishes to pay a tipped employee less than $8.30 per hour, it may do so, but only if it follows the requirements for doing so. Pursuant to Section 3(m) of the FLSA, an employer may take a tip credit towards the minimum wage requirement – the maximum tip credit permissible under the FLSA is $5.12 per hour because employers may pay tipped employees no less than $2.13 per hour and that is $5.12 per hour less than the federal minimum wage.
However, minimum wage in Ohio is $8.30 per hour and the minimum an employer must pay a tipped employee is $4.15 per hour in Ohio. If you are a tipped employee and you are making less than $2.13 per hour or $4.15 per hour, then you may have violations of the FLSA or Ohio’s minimum wage law.
Employers may only take a tip credit if they provide a proper notice prior to taking the tip credit. The tip credit notice must be provided BEFORE the employer takes the tip credit. Here are the requirements for a proper tip credit notice:
Employers may provide oral or written notice of the tip credit provisions set forth above. However, an employer who fails to provide the required information CANNOT use the tip credit. Consequently, if an employer does not provide proper tip credit notice, but they still take the tip credit, then they are in violation of federal and state laws. Employees who do not receive proper tip credit notice are entitled to full minimum wage for all of their hours worked.
If you are a tipped employee and your employer:
We are here to help you with any issues related to your compensation. Please feel free to contact our office today to speak with our Ohio Wage and Hour Lawyers about tip credit issues, overtime issues, tip pooling issues, or any other questions you have about your wages. You may contact our office for a FREE consultation with our Ohio Wage and Hour Lawyers by filling out the information below or calling 1-614-949-1181.