R610-1-4. Tips and Commissions

A. An employer may credit the tips, sometimes referred to as gratuities, received by tipped employees (an example would be waiters and waitresses) against the employer's minimum wage obligation. The tips must be received by the employee, reported to the employer, and must reach a threshold of at least $30.00 per month before credit can be allowed.

B. An employer has a cash wage obligation of at least $2.13 per hour in meeting the required minimum wage. If an employee's tips combined with the employer's cash wage obligation of $2.13 per hour do not equal the minimum hourly wage requirement, the employer must increase its cash wage obligation to make up the difference.

C. A compulsory charge for service imposed on a customer by an employer's establishment, is not a tip. Such charges are part of the employer's gross receipts and within its discretion to allocate. Where service charges are imposed and the employee receives no tips, the employer must pay the entire minimum wage and overtime required by law.

D. All tips shall be retained by the employee receiving the tips. However, this requirement does not preclude tip pooling or sharing arrangements where an employer mandates that tips be pooled and divided or shared among those employees who customarily and regularly receive tips.

1. A bona fide tip pooling or sharing arrangement may include employees who customarily and regularly receive tips from customers directly or via a tip pooling or sharing arrangement.

2. Dishwashers, chefs, cooks, and janitors are not tipped employees and do not qualify for a tip credit nor are they eligible to participate in an employer mandated tip pooling or sharing arrangement.

E. Every employer using the tip credit must so inform the affected employee at the time of hire. Any tip pooling or sharing arrangement must be made in writing and provided to each affected employee at the time of hire or prior to implementation.

F. Where tips are charged on a credit card, and the employer must pay the credit card company a percentage of the bill for its use, the employer may reduce the amount of the credit card tips paid over to the employee by a percentage no greater than that charged by the credit card company.

G. In computing the minimum wage, tips and commissions must be counted in the payroll period in which the tip or commission is earned.

H. This section does not apply to tips or commissions as delineated in Section 34-40-104(1).