Ohio and Federal Laws for Tipped Employees
As an employee, labor laws protect your rights, especially regarding how much you earn as a salary and the tips you can receive. These laws can sometimes be difficult to understand, and getting in touch with an Ohio employment lawyer will help you understand how labor laws work and how you can benefit from them.
In Ohio, employees’ wages are protected by the provisions of the Ohio employment law and the Fair Labor Standards Act (FLSA). These laws mandate your employer to pay you the minimum wage, bonuses, and overtime. They also allow some classes of workers to receive tips. They are known as tipped employees; you will not earn the standard minimum wage if you are one.
Under federal law, your employer must pay you $2.13 per hour. However, the rules governing tipped employees are intricate, and if you don’t know them, you might get cheated by a shady employer.
This article will provide a detailed and short explanation of federal and Ohio employment laws on tipped employees. In addition, we will explain if tipped employees are entitled to overtime.
Who Is a Tipped Employee?
Before we explain the federal and Ohio laws for Tipped employees, you need to know who is classified as a tipped employee under the law. According to the FLSA, a tipped employee is a worker who customarily and regularly receives tips that exceed $30 a month, provided the tips are not sporadic.
It is essential to understand this because the tipped worker does not maintain their status permanently. For example, tipped workers are entitled to receive full minimum wage during months where they do not get up to $30 in tips.
You are a tipped employee if you regularly and customarily receive $30 or more per month in tips. In addition, Ohio employment laws allow employers to pay tipped employees a minimum cash wage below the minimum cash wage required under the federal Fair Labor Standards Act. Finally, your total income must be up to the minimum wage when the tips and hourly wages are summed up.
What Is a Tip Credit?
Tip Credit is central to what makes the wages of workers classified as tipped employees different from others under regular minimum wage. It is therefore vital to understand tip credit and how it works.
With tip credit, employers are permitted to pay you less than the minimum wage if your total tip and salary are equal to or higher than the minimum wage. The cash wage is subtracted from the minimum wage to determine tip credits (minimum wage – cash wage = tip credit).
Employers in Ohio are required to pay tipped workers at least half of the annual minimum wage that applies in the state. For instance, the cash payment in Ohio in 2022 is $4.65, but the minimum wage is $9.40. Therefore, the tip credit will be $4.75 by deducting $4.65 from $9.40.
Employers are obligated to make tip credit policies known to you. It does not count as informing you if you had to rely on information from pay stubs.
Your employer cannot legitimately claim tip credits if they fail to educate you about the policies. In summary, federal and Ohio employment laws guarantee that as a tipped employee, you must:
- Retain all tips
- Be given prior notice of tip credit
- Be paid an hourly cash wage
- Regularly make $30 in tips each month to be classified as a tipped employee
Can Tipped Employees Get Overtime?
The simple answer to this question is yes — but there’s more to the story.
While tipped employees are entitled to overtime, they often do not get it. According to federal employment law, to calculate the correct overtime rate of compensation, employers must multiply the federal minimum wage ($7.25 per hour) by 1.5 and then deduct the tip credit amount.
If your employer does not follow this formula, you could be entitled to seek unpaid overtime compensation and even double damages.
Is Tip Pooling Legal?
Tip pooling is entirely legal under FLSA and Ohio employment law. When there is a tip pooling arrangement, your employer asks all employees in the tip pool to chip in a portion of their tips, which is then shared among a group of employees by percentage.
Let the Ohio Employment Lawyers at Hux Law Firm Help You Get What You Deserve!
Do you think your employer is violating your rights based on what you learned about FLSA and Ohio laws for tipped employees? If yes, there are several ways we can intervene and help you get the appropriate compensation. Act now by scheduling a free consultation with an Ohio employment lawyer today.
