The Fair Labor Standards Act (FLSA) sets standards for wages and hours across the United States, including guidelines for tipped employees. The FLSA influences how businesses pay employees like servers, bartenders, and others who depend on tips as part of their income. Both employers and employees must understand how the FLSA interacts with state laws to ensure compliance.
Tipped minimum wage
Under the FLSA, tipped employees can earn a lower minimum wage, as long as their total earnings, including tips, meet the state’s minimum wage. The tipped minimum wage is $4.13 per hour, which is higher than the federal minimum wage for tipped workers. Employers must ensure that employees earn enough in tips to bring their total hourly wage up to New Jersey’s minimum wage of $15.00.
If a tipped employee falls short of the state minimum wage in tips, the employer must make up the difference.
Tip pooling and sharing
The FLSA permits tip pooling in certain circumstances, but it places restrictions on employers. Employers cannot take a share of the tips, though they can require employees to pool them. The law also prevents employers from using employees’ tips to pay non-tipped staff, such as cooks or dishwashers. Employers must inform employees of any tip pooling arrangements in advance.
Tip credit
The state does not allow employers to use a “tip credit” to reduce the state’s minimum wage. Employers in the state must pay the tipped minimum wage of $4.13, but they must also ensure employees earn enough in tips to reach the state’s minimum wage of $15.00 per hour. While the FLSA allows a lower federal minimum wage for tipped employees, New Jersey has stricter requirements.
Tipped employees receive protection under both the FLSA and state law. While the FLSA allows a lower minimum wage for tipped employees, the state’s laws ensure that workers earn a fair wage. Employers must stay aware of both federal and state regulations to avoid violations and ensure fair compensation.