When Can Your Employer Take a Portion of Your Tips?

Posted on behalf of Peter T. Nicholl in Unpaid Overtime Jun 05, 2019

disappointed with a tipHas your employer ever taken a portion of your tips?

The truth is this may be a violation of your rights under state and federal law. There are some situations when taking a portion of your tips is allowed, but many others when it is not. Below, you can learn more about this issue to try to determine if your rights have been infringed.

If you believe that your tips have been wrongfully taken from you, the experienced lawyers at the Peter T. Nicholl Law Offices can carefully review your claim. We can discuss your legal options during a free case consultation.

Maryland Law on Tipped Employees

According to Maryland’s Department of Labor, Licensing and Regulation, a tipped employee is defined as an employee who customarily and regularly receives more than $30 each month in tips. Maryland law prohibits employers from requiring these employees to reimburse them for tips received or from being required to pay a customer’s check who left without paying for it.

The law provides for a “tip credit” toward the hourly minimum wage due to the employee for the amount the employee receives in tips. The employer is responsible for paying at least the minimum wage to tipped employees, which can be made up from the base wage and the tips.

At the time of publication, the minimum wage in Maryland is $10.10/hour and is scheduled to go up to $11/hour by 2020. So, if an employee earned $5 in tips during the hour, the employer could use this $5 toward the minimum wage requirement and pay $5.10 for the hour in base pay to comply with the minimum wage requirement. The employer must adjust the credit amount so that the employee earns at least the minimum wage for every hour he or she works. In any case, the employer is required to pay at least $3.63/hour to tipped employees.

The employer must inform the employee about the tip credit provisions before employment starts. If the employer fails to provide the necessary legal information and notice to employees, there may be a claim made against the employer that can result in the employer being required to pay the full minimum wage to all of the tipped employees. Tipped employees must also be paid overtime pay for all hours that they work over 40 hours in a workweek.

If the employer does not pay the employee or follow these rules, the employee can seek immediate legal action for his or her unpaid wages. In these cases, the employee can seek full payment of the minimum wage for all hours worked. The federal Fair Labor Standards Act also allows employees to recover twice the wages that they are actually owed, and state law allows affected employees to recover triple the wages owed in certain situations.

What About Pooling Tips?

Maryland law does allow employers to pool tips from all of the employees who receive tips and divide them between a pool of employees. To legally comply with this provision, the employer has to notify employees of the tip pooling policy. The employer must also calculate tips received based on the final amount that the employee receives from the tip pool.

Additionally, employers cannot keep a portion of the tips or pay them to supervisors or managers. Furthermore, employers who do not take a tip credit can have a tip pool that includes back-of-the-house employees who do not usually receive tips, such as dishwashers and bussers. If the employee does take a tip credit, the tip pool can only be divided between tipped workers.

What About Mandatory Service Charges and Credit Card Fees?

Mandatory service charges are not considered tips under Maryland law. However, an employer can use this revenue to pay a portion of the employee’s wage. Employers can legally subtract any credit card processing fee on the transaction before paying the tip to the employee.

Contact an Experienced Attorney for Help with Your Unpaid Wage Claim

If you believe that your employer did not pay you in compliance with the law, it is important that you learn about your rights and legal options. The skilled Maryland unpaid overtime attorneys at the Peter T. Nicholl Law Offices can assess your case and determine if you have a viable claim.

Set up your free legal consultation right now. Call our firm at 410-244-7005.

Contact our personal injury lawyers for a free consultation if you have been injured by another’s negligence. You may be entitled to compensation.



Our Offices

Local phone 410-244-7005
36 South Charles Street, Suite 1700
Baltimore, MD 21201

Local phone 757-397-6424
355 Crawford Street
Portsmouth, VA 23704