Many North Carolina employees, including waitresses, bartenders, and other service workers, count on tips to help them earn a living. Federal and state wage and hour laws protect employees’ rights involving tips. These laws detail what exactly tips are and whether you have to add some of your earnings to a tip pool.

If you believe your employer has violated tip pooling laws, schedule a consultation with a tip pooling violations lawyer in Charlotte at Gibbons Leis, PLLC: 704-612-0038.

What is a tip?

Tips are an amount of money a customer gives an employee in addition to the cost of the goods or services provided. Tips must be:

  • Entirely voluntary
  • Determined by the customer in terms of amount
  • Given to the person of the customer’s choosing

Note: Mandatory service charges implemented by the employer are not a tip under federal law. Employees are not legally entitled to that money, but many employers choose to give part or all service charges to their employees (often to offset the minimum wage requirement).

Tips left by credit card do not necessarily belong to the employee in their entirety. Employers may lower the employee’s tip by the percentage owed to the credit card company for processing fees.

What are tip credits?

In general, all tips earned by an employee belong to that employee alone. However, the Fair Labor Standards Act (FLSA) and North Carolina law allows employers use an employee’s tips towards his or her minimum wage, called a tip credit.

This tip credit must be no more than $5.12 per hour (the difference between the minimum required cash wage of $2.13 and the federal and North Carolina minimum wage of $7.25). Employers must notify employees of this tip credit in advance.

Tip credits allow employers to pay employees below the minimum wage without violating the law.

For employees that spend more than 20 percent of their work hours doing non-tipped tasks, the employer may not take a tip credit for the hours spent on those tasks. For example, if a bartender spends two hours cleaning his bar area after close, his employer may have to pay him the full minimum wage for those two hours, as he was not earning tips for those hours.

Tip Pooling

Many states, including North Carolina, allow employers to require tip pooling. Tip pooling requires an employee to contribute a portion of their individual tips into a tip pool. The employer then distributes the total amount in the pool amongst a group of employees.

Who can participate in tip pooling?

Only tipped employees can participate in the pool. Tipped employees are workers that receive over $30 a month in tips on a regular basis. Some common types of tipped employees include:

  • Servers
  • Barbacks
  • Hairdressers
  • Bellhops
  • Counter personnel

Is there a maximum limit on how much an employee must contribute to a tip pool?

The FSLA does not impose a maximum contribution amount to a valid tip pool. However, an employer can only require an employee to pay a reasonable and customary amount into the pool.

Does the law allow non-tipped employees in tip pools?

No, the law does not require employees to share tips with employees who do not generally receive a tip. Generally, tipped employees do not need to share tips with:

  • Cooks
  • Dishwashers
  • Janitors
  • Managers
  • Supervisors
  • Employers

Giving tip pool money to the wrong employees is a violation of law. If an employer allows non-tipped employees to dip into the tip pool, the employer may lose its tip credit and be forced to pay the employee a full minimum wage.

Determining whether your employer involved you in an illegal tip pool can be difficult. Our lawyers can help determine if you were involved in an invalid tip pool as well as how much you can recover.

What should I do if my employer forced me to participate in an illegal tip pool?

If you did not receive your full wage as a result of an illegal tip pool, you can file a lawsuit against your employer.

If you decide to file suit against your employer, you and your attorney will need to establish the following:

  • That you worked for your employer
  • That the law considers you a “tipped employee”
  • That your employer’s tip pool was invalid
  • That you did not receive full wage owed to you

If you can successfully prove that you were involved in an illegal tip pool, your employer will have to pay you the tips you put into the pool. If there is evidence that your employer acted intentionally, he will likely also owe you liquidated damages (double the amount owed).

It is important that you file suit within two years of the wage loss. Filing suit too late may prevent you from recovering damages altogether.

Call a Charlotte Tip Pooling Violations Lawyer for Help

States and the federal government have implemented tip pooling laws to protect employees and ensure that they receive fair compensation for the work they do.

Tipped employees often rely on tips to support themselves and their families and as such, should always fight for their right to a fair wage.

If you believe your employer has forced you into an invalid tip pool, call Phil Gibbons. He and the members of his legal team have dedicated their entire careers to employment law. This means that they will be able to determine if your employer took advantage as well as what you can recover.

We will represent you from start to finish in your case and ensure you get everything to which you are entitled.

Schedule a free consultation today: 704-612-0038.