Tipped employees are common in restaurants, hotels, salons, and other service industries. The Fair Labor Standards Act (FLSA) imposes specific wage and hour rules that apply only to tipped workers. These rules include specific requirements for calculating minimum wage and overtime pay for tipped employees, restricting which workers may share in tip pools and addressing mandatory service charges.
Tip-related violations are a frequent source of administrative investigations and private lawsuits. Failure to comply with the FLSA’s tip requirements can lead to costly investigations, civil penalties, back wages and liquidated damages liabilities, and reputational harm. Establishing best practices can help employers reduce legal risks and stay compliant with the FLSA’s wage and hour requirements for tipped workers.
This HR Compliance Overview provides employers with a general overview of the FLSA’s tip regulations and outlines best practices to help them develop and maintain compliant employment practices: Best Practices for Complying with FLSA Tip Regulations.
