A person’s employer does not have the legal right to keep the tips that the employee receives, and this is a well-established fact. Some unscrupulous employers, however, have come up with ingenious ways to get around the laws. One of those ways is through illegal tip pools that masquerade as legitimate tip pools. Understanding the laws can help you to better protect your financial rights. Therefore, if you believe that your employer is using illegal tip pools to keep tip money that belongs to you, consider contacting the experienced Atlanta employment law attorneys at Hall & Lampros, LLP, by calling 404-876-8100 to schedule a consultation and discuss advocating for a favorable resolution.
Your Tips Are Protected by Federal Law
As a tipped employee, you are protected by the Fair Labor Standards Act (FLSA), as updated by the United States Department of Labor in both 2020 and 2021. The message from the federal government is clear. An employee’s tips belong to the employee—not to the employer, not to a manager, and not to a supervisor. These protections relate directly to how legal tip pools cross the line into illegal tip pools.
Tip Credits
In order to understand tip pools, one must understand tip credits. In the state of Georgia, the following rules apply:
- Employers are bound by the minimum wage at both the state and federal levels, which is currently $7.25 per hour for both
- There is a separate minimum wage for tipped employees, however, which is still $2.13 per hour at both the state and federal levels. If an employer dips below the primary minimum wage, the company must ensure that an employee’s tips cover the difference
- An employer is allowed to take what is called a “tip credit” to make up the difference between the minimum wage that the company pays a tipped employee and the actual minimum wage, which every employee is entitled to receive
- As long as an employee’s tips make up the $5.12 per hour difference, the employer is not obliged to cover that amount, which would be paid by tip credit
- If, over the course of a work week, the employee does not make up the difference in tips, his or her employer is required to make up the difference
While the tips that go into the tip credit always belong to the employee—never to the employer—those employers who use tip credits have more interaction with their employees’ tip money. When employers do not proceed with transparency, employees are more vulnerable to illegal maneuvers, such as illegal tip pools. If you have questions about your tips, the seasoned Atlanta employment law attorneys at Hall & Lampros, LLP, can help.
Illegal Tip Pools
When employers fail to carefully adhere to each of the requirements listed below, they are running illegal tip pools and violating the legal rights of their employees. In Georgia, an employer has the right to require employees to “tip out,” or participate in a tip pool. Tip pools work as follows:
- All tipped employees contribute a specific portion of their tips to the tip pool
- These combined tips are then divided among everyone in the tip pool
Exacting rules that apply to tip pools are intended to protect the financial rights of the tipped employees. These include the following:
- If an employer uses a tip pool, an employee must be notified of the tip pool in advance
- An employee cannot be required to add a greater portion of tips into the pool than is considered customary and reasonable
- An employer can claim only the amount an employee receives from the tip pool as a tip credit—not the amount the employee contributed
- Only those employees who customarily receive tips can be included in the tip pool. A tipped employee cannot be required to share his or her tips with workers who are not tipped, such as cooks, bussers, and dishwashers, unless the employer does not claim the tip credit and pays the full minimum wage up front
- Under no circumstances can any amount of the tip pool go to an employer, owner, manager, or supervisor
Contact an Experienced Atlanta Attorney Today
Tips are an important part of a tipped worker’s regular income, and protecting that tip money from illegal tip pools is paramount. If you have concerns about the legality of your employer’s tip practices, consider contacting a trusted Atlanta employment law attorney at Hall & Lampros, LLP, by calling 404-876-8100 today to learn more and to schedule a consultation.
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