During COVID-19 we provide online consultations via chat.

Laws For Tipped Workers and Employees

Founding Member of Moshes Law, P.C.
During his years of practice, Yuriy has concentrated in litigation and real estate transactions as his areas of expertise.

In the big apple, and other major metropolitan areas around the country, many employees work in the service industry. Of those employees, a majority of them work jobs that are dependent upon tips. Tipping and the laws that regulate such employment give tipped employees rights that they should be aware of and regulate employers in how they can and cannot treat their workers. As tipped workers, it is important that you know the laws and your rights, especially when starting a new tipped worker job. 

Labor Lawyers in NYC Free Consultation




    Some common tipped jobs, especially in New York City:

    • Waiters/Waitresses
    • Bartenders
    • Bussers
    • Door Openers
    • Bellhops/Luggage Handlers
    • Hotel Maids/Attendants
    • Cab Drivers
    • And Many More.

    If you are curious about your rights as a tipped employee or are facing issues of theft or abuse from your employer it is important that you speak with a trusted legal advisor. Each state has its own set of laws and regulations when it comes to employment, minimum wages and tipping. For those with questions, that live in the State of New York, you should start off with Moshes Law.

    Basics of Tip Regulations

    In legal terms, under federal and state law, tips to employees belong to the employee and not to the employer. Employers, and co-workers are NOT allowed to ask a tipped employee to give them their tips, but there are some allowances for the manipulation of tips that can benefit both the employee and employer if agreed to.

    Over the years, the etiquette and necessity of tipping for some jobs has been changing. In some areas, the changes have been for the better and in other areas, for worse. 

    tipped employees rights

    One of the benefits lately has been that businesses have used electronic payments systems to encourage tipping. A purchaser will often see suggested tip levels on receipts and payment screens when they are finalizing their payment. This politely reminds patrons of the need to tip as well as helps them calculate a proper tip instantly. 

    Some changes in tipping and technology have been a detriment to employees however; there is now a paper trail that allows owners to keep track of tips earned, whereas in the past, tips were generally unaccounted for or grossly under reported for various reasons. 

    Whether you, as a tipped worker, like the transparency or not, it has led to new ideas when it comes to tipping.

    What is a Tip Credit?

    A tip credit is an accounting practice that some employers use to ensure that their tipped workers are earning a minimum wage. In states where tip credits are allowed, employers can count some or all of a tipped employee’s tips towards their minimum wage requirements. 

    For example, as a tipped employee, you might only make $2.13 an hour, but the local minimum wage might be $10 an hour. The tips you report to your employer will be “added” to that $2.13 an hour value, bringing you up to the $10 minimum. With tip credits, an employer and an employee can see that they are meeting the minimum wage as required by many jurisdictions. 

    There are other ways that tips can be used and manipulated as well, like it or not. 

    Tip Pooling

    Working as a tipped employee can oftentimes see highs and lows when it comes to tipping. Some days, you encounter cheap customers that don’t know how to tip properly, or some that don’t understand the concept at all (often a problem from tourists from different countries). 

    To try and give a staff a bit more consistency and less variance in their “pay”, many establishments will create and require a Tip Pool.

    You should understand while not every tipped employee is happy about tip pools, they are legal under federal law and in most states. 

    Basically, a tip pool requires you to pay part of your tips into a pool that is then shared equally with the entire staff, thereby giving you a more stable income, whether you have a good or a bad night. 

    New York State does allow tip pooling, but there are rules and regulations to it. Only employees that perform or assist in personal service to customers as a major part of their job are able to take part in the tip pool. Employers cannot take a portion of the pool, nor can they be a part of it. It all must be paid out to the employees of the pool. 

    Labor Lawyers in NYC Free Consultation




      It is very important that employers tell new hires that they utilize a tip pool. Honesty and transparency is the best policy for professionals.

      Dual Job

      In some service industry jobs, there are periods of time where a tipped employee does non-tipped work. This is where you might consider that job as a “dual job”. According to labor laws, an employer can use the tip credit when a tip employee does work that is providing a service to customers from whom they will earn a tip.

      For example; a waiter may have a 10 hour shift, but only 8 hours of that shift is spent serving customers in the dining room. The other 2 hours may be spent preparing for the shift, cleaning, restocking supplies, making food or desserts. For these two hours of the shift, how should the employees be paid? These two hours of work are directly related to their tipped work, so employers are able to take a tip credit for that time spent on working non-tipped hours. 

      If, however, that same waiter was tasked with doing work not related to the preparation of food or serving said food (parking cars, or doing marketing work, etc.), then the employer is not able to utilize the tip credit. 

      Who is Considered as a Tipped Employee?

      According to labor laws, an employee is considered a tipped employee if they, as a full-time, part-time or temporary worker, consistently earn more than $30 a month. 

      Again, it can be any of the jobs listed earlier in the article that typically and customarily earn tips from patrons. 

      How Employees Get Paid for Doing Non-Tipped Work

      As we talked about earlier, oftentimes, tipped employees will do work that is not tipped. What are the rules in terms of amount of hours and the differences in pay?

      tipped workers

      There are limits to the amount of time a tipped employee can do non-tipped work, which will also impact the employees’ use of the tip credit. In some areas, there is the 80/20 rule, meaning the employee can’t do more than 20% of non-tipped work, otherwise the employer must pay for that non-tipped work at a different rate of pay. 

      Categories of Tipped Work in 2022

      With the pandemic, many changes have come to the service industry, including a re embracing of the 80/20 rule. Other changes have been categories of tipped work as well.

      Tip-producing Work

      Some tipped jobs have more duties to their scope than others. Again, the position we have referenced the most has been that of a waiter/waitress.

      For a server, the tip producing work can be substantial as can be seen in this article

      Some tip-producing work involves:

      • Table service
      • Making recommendations
      • Adding garnish to food
      • Making coffee
      • Adding dressing to pre-made salads

      Directly Related, Untipped Work

      Some non-tipped work that directly supports:

      • Rolling silverware
      • Folding napkins
      • Refilling condiment jars and bottles
      • Setting and bussing tables

      For this type of work, the employer can legally use the tip credit. 

      Unrelated Work

      For work that is unrelated to the tipped work, the employer CANNOT use the tip credit.

      For this type of unrelated work, the employer must pay you the local minimum wage and not expect you to work at the tipped employee wage of $2.13 an hour. 

      If this type of abuse is happening, it is time to speak with a trusted attorney. 

      Labor Lawyers in NYC Free Consultation




        Get Legal Advice on Tipped Employment Rights

        Much like the work itself, tipped employment rules and regulations can be complex. Mistakes can be made legitimately or employers can take advantage of employees that don’t know what their rights are. 

        If you feel that you are being taken advantage of as a tipped employee, you should speak with your manager. If that does not work, then reach out to a trusted legal mind in the field like the attorneys at Moshes Law.

        About the Author

        Gennady Litvin, Esq. is an associate with Law Office of Yuriy Moshes, P.C. Mr. Litvin graduated Pace university with a Bachelor’s Degree in Business Economics, and earned his J.D. at the University of Miami School of Law where he was a member of the Business Law Review.

          Free Case Evaluation





          As Seen On

          Logo Avvo
          Logo Nolo
          Logo Law360
          Logo Super Lawyers
          Logo Realtor.com
          Logo BLF
          Logo Business
          Logo 1010 Wins
          Logo New York Post