Tipped Employee Rights in Pennsylvania

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Tipped employees have many rights under Pennsylvania and federal minimum wage and overtime laws. If you think you were denied your lawful wages, contact BCJ Law for help. Our services usually are free since wage and hour laws often require companies to pay our fees and costs. Call us at 1-800-997-5561 or complete our contact form.

You have rights as a tipped employee:

What are common wage violations for tipped employees?

Tipped employees include servers, bartenders, valets, hosts, door persons, cleaners, delivery drivers, movers, or other people that get tips as part of their occupation. These types of employees are protected by the Fair Labor Standards Act (FLSA) and Pennsylvania laws called the Minimum Wage Act (MWA) and the Wage Payment and Collection Law (WPCL).

Tipped employees sometimes are denied the minimum and overtime wages required by the FLSA, MWA, ad WPCL. Here are common violations tipped employees may experience:

  • Withholding tips.
  • Failure to notify employees of a tip credit.
  • Sharing tips with non-tipped employees.
  • Failure to notify employees of tip pooling or sharing arrangements.
  • Deducting unauthorized amounts from tips.
  • Withholding service charges from tips.
  • Taking a tip credit that is greater than allowed by law.
  • Deducting unlawful processing fees from tips.

What is the "tip credit?"

Pennsylvania’s minimum wage is $7.25 per hour, while the overtime wage is 1.5x whatever hourly wage you receive. In simple terms, the “tip credit” is a wage calculation procedure permitted by Pennsylvania and federal law. Basically, this procedure allows employers to reduce your hourly wage based on your tips.

The maximum tip credit an employer can take under the FLSA is $5.12 per hour, which yields a minimum wage of $2.13 per hour. However, Pennsylvania law requires a minimum cash wage of $2.83 per hour. So, an employer paying tipped employees in Pennsylvania, can only take a maximum tip credit of $4.42. If your tips fall short of the maximum tip credit, your employer must make up the difference by increasing your hourly wage.

When can employers take a "tip credit?"

Employers can take tip credits, and pay reduced hourly wages, only if employers inform employees that a tip credit will be taken and that a reduced hourly wage will be paid. Here is what an employer must do to utilize the tip credit when paying tipped employees reduced wages:

  • Inform employees the base wage they will be paid (not below $2.83 in PA).
  • Inform employees of the tip credit the employer will take (not above $4.42 in PA).
  • Disclose that tip credit won't exceed the tips employees actually receive.
  • Disclose that tips are employee's property (absent a lawful and properly disclosed tip pooling/sharing arrangement).
  • Disclose that employer won't take tip credit unless it was disclosed properly.

Are tips the sole property of the employee?

Tips are the sole property of employees, and employers can’t take tips from employees. In fact, even if your employer pays you the required minimum or overtime wage, it still can’t take your tips.

That said, employers can operate tips pooling or sharing arrangements. Tip pooling doesn’t violate the law when tips are shared only between workers that regularly and customarily receive tips, like servers, hosts, and bartenders (not dishwashers, cooks, or chefs). Tipped employees also must be notified of tip pools. Obviously, the employer can’t retain any pooled or shared tips.

Is a service charge a tip?

While a service charge is not considered a tip under the FLSA, it may be considered a tip under Pennsylvania law. So, while service charges are the property of employers under federal law, service charges may be the property of employees under Pennsylvania law.

Employers that withhold portions of servicer charges may be in violation of Pennsylvania law. Employers also are violating the law if they withhold any other tipped amounts.

Can card processing fees come out of my tips?

Yes and no. Your employer can’t deduct the total amount of credit card processing fees from your tips. For example, if the bill is $100 and the credit card processing fee is 3%, your employer can’t deduct from your tips the entire 3% processing fee. Nevertheless, your employer can reduce your tip amount by 3%. So if you’re tipped $20 on a $100 bill paid with a credit card, your employer can reduce your tipped amount by 3%, to $19.40.

Hire BCJ Law to help!

Contact our minimum wage and overtime attorney if you’re a tipped employee and believe your employer is withholding tips, taking unlawful deductions, or failing to pay you the required minimum or overtime wages. Call us at 1-800-997-5561 or complete our contact form.

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