Tipping is a way of life in the United States, where many service industry workers rely almost completely on tips to pay their bills. Tips are an extra amount that customers pay voluntarily on their own over the top of the charge for the service. In Florida, which relies heavily on tourism and service industries, tips for employees are commonplace. If you work in a Florida service industry, you may be wondering, what are tip credits in FL? Tip credits give employers a means of counting tips toward ensuring that each employee makes at least the minimum wage.
Tip credits can make the process of calculating income tricky. Some employers may try to take advantage of this law to reduce their obligations to pay their employees at least a minimum wage. This is not legal. If you believe your employer is not calculating your wages properly and is leaving you short-changed, you can seek help from our employment lawyer. We’ll provide more information about what tip credits in FL are and about how the state laws work.
Understanding What Tip Credits Are in Florida
If employees are receiving tips, their Florida employers are probably taking advantage of the law that allows tip credits. Tip credits are essentially the employer paying the employee a salary, or base wage, below the minimum wage in Florida with the expectation that tips will at least make up the difference. If the employee doesn’t make enough in tips to cover this deficit, then the employer is legally required to pay the difference as part of a larger base wage.
At the end of September 2022, Florida law required an increase in the minimum wage to $11 per hour, according to the Florida Department of Economic Opportunity. The minimum wage will increase by $1 per hour at the end of September each year through 2026, when it will reach $15 per hour. Any further increases beyond 2026 would be tied to increases in inflation.
According to the Florida Restaurant & Lodging Association, the amount that employers are allowed to claim as a tip credit will not change as the minimum wage changes. The tip credit remains at $3.02 per hour. This means at the start of 2023, employers were allowed to pay a base wage of $7.98 to employees who receive tips, using the tip credit of $3.02 to make up the difference in the $11 minimum wage requirement. After the minimum wage increases to $12 per hour late in 2023, the employer would have to pay a base wage of $8.98 to employees in tipped jobs, because the tip credit will remain at $3.02.
Can an Employer Ever Pay Less Than the Required Wage?
In Florida, employers cannot take a tip credit of greater than $3.02 for any reason. Even if the employee makes a few hundred dollars in tips during an eight-hour shift, the employer must pay the employee a base wage of at least $7.98 per hour (as of early 2023 in Florida) and can only use a tip credit of $3.02. It doesn’t matter if the employee made tips equal to about $4 per hour during a shift or about $40 per hour, the tip credit amount does not change. The employer cannot demand that the employee give the employer some of the tips from an especially successful shift, either. These tips belong to the employee.
Additionally, if the employee does not make enough in tips over a work week to equal $3.02 per hour in tips, the employer must make up the difference. If a tipped employee only made $2 per hour in tips during this week, the employer could only take $2 as the tip credit. The employer then would have to pay the employee a base wage of $9 per hour for this week to make up the difference and to reach the required minimum wage of $11 per hour (as of early 2023 in Florida).
The employer cannot ask the employee to carry over extra tips made in a previous week to compensate for the lower tips in this week, either. Additionally, the employer cannot take an average of the tips you earned over a period of several weeks in calculating your paycheck to try to compensate for lower tips during a particular week and to try to avoid having to increase your base wage. Each week serves as its own entity when calculating the tip credit.
How Do Tip Pools Affect the Tip Credit?
If your employer makes use of a tip pool at your workplace, this could affect your wages related to the use of a tip credit. A tip pool is a requirement from an employer that all employees in positions where they earn tips must chip in some or all of their tips for the week. Then, at the end of the week, the employer would split the money in the tip pool equally among all tipped employees. It is legal for employers to use this method, as long as they notify all employees of the use of a tip pool before they begin working.
When calculating how an individual employee’s amount received from a tip pool affects the tip credit, it works in a manner similar to an employer who doesn’t use a tip pool and allows employees to keep all the tips they earn for themselves. As long as each employee takes home from the tip pool at least $3.02 in tips per hour worked, the employer can use the tip credit and pay each employee the minimum base wage of $7.98 (as of early 2023).
If the tip pool resulted in each employee taking home less than $3.02 in tips per hour worked, the Florida employer would have to make up the difference by paying each employee a higher base wage. When combined, the money from the tip pool and the base wage for each employee must be equal to or greater than $11 per hour worked for the week (as of early 2023 in Florida).
What If an Employee Performs Non-Tippable Work in a Job With Tips?
If the employee performs tipped and non-tipped duties concurrently or contemporaneously (or performs the non-tipped duties shortly before the tipped work begins or after it ends), the employer can still take a tip credit for the time the employee spent performing the non-tipped duties, so long as the duties are only “for a reasonable time” immediately before or after performing such direct-service duties.
For waiters and waitresses, this includes such tasks as setting up and cleaning tables, among other locations. An example that illustrates this is a server who spends the last two hours of the shift doing work other than waiting tables, such as cleaning the restaurant, making coffee, or performing miscellaneous duties.
However, employers cannot claim tip credits for unrelated work their employees performed for them, such as running personal errands for the employer, or for any non-tipped amount of time that can be deemed to be unreasonable. This reasonable time standard replaces a previous rule based on 20% of the time spent.
Can an Employer Withhold Tips in Florida?
In Florida, tips are the “sole property” of the employee. It doesn’t matter if the employer takes a tip credit. The Fair Labor Standards Act (FLSA) makes it illegal for the employer and employee to make any sort of arrangement where the employee must share tips with the employer. However, there are some unusual situations that allow employers to withhold certain amounts that may seem like tips, because the law does not recognize these amounts as tips.
Primarily, an employer can seem to withhold tips in Florida for mandatory service charges. These are “tips” that are automatically included on bills for large parties. But federal law and most state laws, including Florida’s laws, don’t recognize these service charges as tips. Technically, employers can legally keep these service charges. Under the law, this is seen as a sort of a contract between the diners and the restaurant, and not necessarily a reward for a server’s good service. Thankfully, though, most employers give either a portion or the entirety of the service charge to their employees.
Can an Employer Deduct Credit Card Fees From Tips?
Generally speaking, tips are the extra money that’s left over after a bill has been paid. However, mandatory service charges or paying for the bill with a credit card may muddle this definition a little bit.
Florida doesn’t explicitly address the topic of credit card processing fees when it comes to tipping. For the most part, employers have to pay processing fees to a credit card company, the average of which is usually around 3 percent. This means that employers could deduct these credit card fees equal to the 3 percent of the server’s tips on that bill paid with a credit card to make up for the processing fees.
When You Are Unsure if Your Tip Credits in FL Are Being Calculated Correctly, Reach Out to Feldman Legal Group
If you believe you’ve been unfairly shorted on your tips by your employer, then you need a skilled, determined employment law attorney to help reclaim what’s rightfully yours. At Feldman Legal Group, we understand just how much tipped employees rely on their tips. To learn more about how we can best serve you, give us a call today at (813) 639-9366.