Wednesday, June 30, 2010

The Treatment of Tips under the FLSA: Which Employees are “Tipped Employees?”

A “tipped employee” is “any employee engaged in an occupation in which he customarily and regularly receives more than $30 a month in tips.”  29 U.S.C. § 203(t).  For examples of types of employees who have been considered to “customarily and regularly” receive tips, see S. Rep. No. 93-690, at 43 (1974); U.S. Department of Labor Wage And Hour Division, Field Operations Handbook, § 30d04(a) (1988); Department of Labor Fact Sheet # 15, available at (last visited June 10, 2010). 

Tipped employees are subject to the protections of FLSA § 3(m).  29 C.F.R. § 531.57.  An employee cannot be assumed to earn more than $30/month in tips because the employee is part of a group of employees who on average make that much in tips.  29 C.F.R. §531.56(c).  The regulations define “customarily and regularly” as greater than occasional but less than constant.  29 C.F.R. § 531.57.  Thus, an employee can periodically fall below the $30/month requirement and still be considered a “tipped employee.”  29 C.F.R. § 531.57.  In any event, the employer must pay at least $2.13 an hour in direct wages.

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