Tip Credit & Minimum Wage Violations
Employer takes a "tip credit" but doesn't make up the difference, misuses tip pooling, or assigns too much non-tipped work at the lower wage.
What This Looks Like
- Tips plus a reduced cash wage don't add up to full minimum wage on slow shifts, and the employer doesn't cover the gap.
- Spends over half a shift on "side work" but is still paid the tipped sub-minimum rate for all hours.
- Required to share tips with kitchen staff or managers.
What Can Affect a Case Like This
What can affect a case like this includes the gap between the tip-credit wage paid and the full minimum wage owed, how much time was spent on non-tipped "side work," whether tip pooling improperly included managers or kitchen staff, and your state's specific tip credit rules — several states don't allow a tip credit at all.
Common Questions About Tipped Employee / Minimum Wage Violations
What is a tip credit?
In many states, employers can pay tipped employees a lower cash wage and count part of their tips toward the minimum wage. If tips plus the cash wage fall short of the full minimum wage, the employer generally must make up the difference.
Can my manager take part in the tip pool?
Under federal law, managers and supervisors generally may not keep employees' tips, including through a tip pool. State laws may add further restrictions.
Does my state allow a tip credit?
It depends. Several states require employers to pay tipped workers the full state minimum wage before tips. Your state page has general information, and an attorney can confirm the current rules.
State Rules Can Change the Picture
Federal law sets the baseline, but state law can add protections that matter for this kind of claim. States that generally don't allow a tip credit include:
See overtime laws for all 50 states →