What You Should Know About Tipped Wages And Tip Pools

Your Wage Rights As A Tipped Worker

Tipped workers make up a significant portion of the workforce, especially in the service and hospitality industries. Unfortunately, the laws pertaining to pay for tipped workers are commonly misunderstood and even more commonly abused by employers.

Texas is one of many states that allow employers to pay sub-minimum wage to tipped workers (currently, wages cannot be less than $2.13 per hour before factoring in tips). The important caveat, however, is that employers must ensure that tipped workers earn at least the federal minimum wage through a combination of base pay and tips. This is called the tip credit.

If tips are not enough to bring sub-minimum wage up to minimum wage, the employer must pay the difference. In addition, your employer is required to provide specific information to you before it can take advantage of the tip credit.

Tip Pooling: What’s Legal And What’s Not

Some tip-dependent workplaces (like bars and restaurants) have a policy of pooling and distributing tips. Tip pools can compensate for the fact that, regardless of the quality of your service, some customers tip generously and others do not.

The practice of tip pooling is legal, but only if certain requirements are met. These include:

  • Employees must be informed by management/ownership that their tips are subject to a pooling arrangement
  • Each worker making sub-minimum wage must be making at least minimum wage with tips from the pool
  • Pooled tips probably cannot and should not be shared with any non-tipped employees, including managers and back of the house workers

It is worth repeating that tips are only for tipped workers. The law is clear that the tips you earn belong to you. Managers and employers cannot “skim off the top” for themselves or share pooled tips with non-tipped workers who already earn at least minimum wage.

How Our Firm Can Help You

If you are a tipped worker and suspect that your employer may be giving you less than you’ve earned, contact us to speak with one of our experienced employment law attorneys. We can assess your wage and hour claim or tip pool case and inform you of your rights and legal options.

Contact Us For A Free Initial Consultation Today

Moreland Verrett, P.C., serves clients in the Austin area and throughout Texas. We are pleased to offer free initial consultations to all prospective clients. To discuss your case for free with an experienced employment lawyer, call us at 512-782-0567. You can also send us an email.