iamge of a bill

Photo credit to d.k. peterson.

If you work for tips, like waiters or bartenders, you probably make less than minimum wage.  That’s because tipped employees can be paid as little as $2.13 per hour, but only if the combination of their hourly pay and their tips is at least as much as the minimum wage (currently $7.25 per hour).  The Fair Labor Standards Act (the “FLSA”) refers to this add-on to the $2.13 per hour as a “tip credit.”  An employer has to tell tipped employees about the tip credit, and is not allowed to require employees to hand any of their tips over to the company, except as part of a “tip pool.”  Employees who are a part of a tip pool put all of their tips together, and the tips are then divided among the group of tipped employees.  This means that each waiter or bartender receives the same amount of tips every shift, even if another co-worker received larger tips that night.