Who Is Entitled To Share The Tips You've Earned?
When you work for tips, and receive a reduced hourly rate from your employer (called a tipped credit rate), all of your tips belong solely to you, the employee. Your employer is not entitled to keep any portion of your tips. In fact, it is illegal to have any arrangement with your employer where a manager or supervisor takes any part of your tips.
When an employer breaks these rules, they lose the right to claim the tip credit. The tip credit basically allows them to pay you much less than minimum wage, so it's a benefit for them. However, if they abuse it, they lose it. And tip sharing is one area where the rules often get broken.
If you're a waiter, server, bartender or busboy in Illinois who works for tips, you're likely relying on those tips for a significant portion of your income. Here are some other potential issues to keep in mind:
- If your employer is making you do non-tipped work, like opening or closing duties, prep work, maintenance or cleaning, then you might be entitled to full pay for those hours. They can't take advantage of your low hourly rate and make you do non-tip work for such a low wage. If you are doing a significant amount of non-tipped work, you might be entitled to minimum wage for all of the hours you work. The same rule may apply if you are required to attend meetings.
- A tipped employee who works overtime needs to be aware of the hourly rate they are being paid for hours worked over 40. Employers often miscalculate the hourly rate by paying 1.5 times the reduced hourly rate, rather than first paying 1.5 times minimum wage and then subtracting the tip credit. Essentially, they calculate it in a way that pays you less than you're entitled to.
- If your tips are paid on a credit card, then your employer is allowed to take a percentage out of your tips toward the credit card company fee they are required to pay. However, doing so can't put your wage below the required minimum wage. And they can't hold your tips past payday while they are waiting to be paid by the credit card company.
Again, your employer can't keep any of your tips, and they can't make you share your tips any way they see fit. Tip splitting or pooling is permitted among tipped employees, if it's done properly. You can't be made to share tips with those who don't work for tips, such as dishwashers, cooks or janitors. Also, you are entitled to at least minimum wage when taking into account your tips and reduced hourly rate. If these don't equal minimum wage, the employer must make up the difference.
When an Illinois employer breaks these rules, they lose the right to pay you the tip credit rate and owe you full minimum wage for all hours worked. An employment attorney who understands federal and state law on tip credit, including minimum wage and overtime issues, can help you do the math. If you have questions, or need help getting the pay that you're owed, contact us.