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Question concerning the federal tip credit. Georgia Federal

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  • Question concerning the federal tip credit. Georgia Federal

    Federal laws state that in order for an employer to take a tip credit, all tips received by the employee must be retained by the employee.

    My question is, what does it mean when federal laws state that all tips received by such employee must be retained by the employee?

    The reason I ask this question is, when an employer takes a tip credit, he is able to reduce the employee's hourly wages which in effect prevents the employee from retaining his tips.

    For instance, a waiter receives $4.00 an hour in tips. Under the provisions of the tip credit, his employer may reduce his minimum wage from $6.55 an hour to $2.55 an hour. However, what this seems to suggest is that if an employee earns less than $4.42 an hour, his employer may deduct 100% of such tips from the employee's paycheck.

    How can an employee retain all tips when the law suggesting such allows his employer to retain his tips?

    For instance, in the case of the waiter who receives $4.00 an hour in tips. While the waiter will go home with minimum wage, regardless of whether customers tip him $4.00 an hour or nothing per hour, his employer will see a savings of $4.00 an hour in staffing costs only if customers continue to tip this particular worker $4.00 an hour. Subsequently, while the worker is seeing no additional income from the tips customers are giving him, his employer is seeing an increase in personal earnings due to the fact that the tip credit allows him to utilize the customer's tip to pay his minimum wage obligations to this particular employee. Rather than the employer using money out of his pocket to pay this particular employee minimum wage, the tip credit seems to allow the employer to utilize the customer's tips to pay this particular employee's minimum wage

    Obviously, when an employer takes a tip credit, there is a financial benefit provided to the employer. My question is, how can an employee retain all tips when his employer is indirectly retaining the tips for himself?

    You see, by reducing an employee's hourly wages by $4.00 an hour when he receives $4.00 an hour in tips, the employer is indirectly taking those tips away from the employee. If you look at the consequences of allowing employer to directly take $4.00 an hour worth of tips away from an employee who is receiving $4.00 an hour in tips what you will note is that the end results are the same whether an employer takes a tip credit or whether the employer directly takes his employees tips. In both cases the employee will simply go home with minimum wage.

    While the tip credit suggests that an employer may take part or all of an employee's tips to pay the employer's minimum wage obligations, it's provisions suggest that in order for an employer to take part or all of an employees tips to pay such obligations, the employee must be allowed to retain all tips. It doesn't make sense.

    Can you please explain how an employee can retain all his tips when his employer is being allowed to take part of them?

  • #2
    Since this is the sixth time on this board alone that you have asked this or a related question, and since at no time have you been satisfied with the answers, what makes you think you're going to get an answer that satisfies you this time?

    Note to responders - check this guy's history on this forum before you attempt. For your own sanity.
    The above answer, whatever it is, assumes that no legally binding and enforceable contract or CBA says otherwise. If it does, then the terms of the contract or CBA apply.


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