Tip Credit Law Basics

The Fair Labor Standards Act requires employers to pay minimum hourly wages to covered employees. In some workplaces, like restaurants and hotels, the employer’s customers may leave tips directly for the workers. This aspect of American culture raises several questions about employee rights and employer responsibilities under the FLSA. How does this form of payment impact the employer’s responsibility to pay a minimum wage? Can the employer take the tips from the worker? Can the worker who receives tips be required to give some to other employees? And if an employer improperly keeps tips, can the worker sue to recover the tips?