If you are one of the numerous employees in New Jersey who receive tips, it is important for you to understand the laws that apply to tipped employees. There are wage and hour laws that apply specifically to tipped employees, giving you some protection. If you believe that your employer has violated the laws for tipped employees, the experienced employment law attorneys at Swartz Swidler might be able to help you to recover the money that you are owed.
Understanding the basics
Under both federal and state law, tips belong to you rather than to your employer. Your employer is not allowed to ask you to give your tips to the employer unless an exception applies as follows:
- Counting the tips towards the employer’s minimum wage requirements as a tip credit
- A valid tip pool is in place in which your tips are shared with other employees
Under the federal law, the minimum wage is $7.25 per hour, but under New Jersey law, the minimum wage is $8.44 per hour. As a New Jersey worker, you have the right to earn the higher state minimum wage. In many states, employers are allowed to pay tipped employees less than the minimum wage as long as the employees are able to make up the difference in tips. This is called a tip credit. In New Jersey, your combined wages and tips must together add up to at least $8.44 per hour, and the tip wage rate may be set by your employer. For tipped employees doing non-tipped work, the rules are different. If your job requires you to spend part of your shift doing non-tipped work and spend more than 20 percent of your time doing the non-tipped activities, your employer must pay you the full minimum wage and cannot take a tip credit for those hours when you are not receiving tips.
Tip pooling laws govern tip sharing in restaurants and elsewhere. Tipped employees may take part in a tip pool in which only the tipped employees may participate. They must be notified of the tip pool, and they may not have to share more than what is reasonable. The tips in the pool must be divided among the participating employees only, and the employer is not allowed to take a cut.
What counts as a tip?
When tipping is voluntary, whatever amount customers leave above the charge for the services or products plus tax are tips. However, if employers impose mandatory service charges or the customers use credit cards to pay, the rules might change.
Mandatory service charges
It is common for restaurants to add mandatory service charges on the bills for private parties, catered events or large tables. These charges are not considered to be tips even if the customers believe that you will receive them although your employer may choose to give you a portion if he or she wishes.
Credit card charges
While New Jersey law does not address payments by credit cards, some states allow employers to take a portion of their employees’ tips that is proportionate to the amount of the credit card charges that they pay. For example, if your employer has to pay 3 percent to accept the credit card payment, your tip for that service may also be reduced by 3 percent.
Contact Our Attorneys
If you are a tipped employee who believes that your employer is not paying you what you should receive, you might want to consult with the experienced employment law attorneys at Swartz Swidler. Call us today to schedule your appointment and to learn more about tipped employees rights.