Pursuant to the Fair Labor Standards Act (FLSA), employers may take the amount a worker earns in tip to “offset” the amount they are required to pay towards minimum wage. However, very specific rules exist concerning when an employer may claim a “tip credit.” For example, employers may only apply “tip credits” when the worker is allowed to retain all of their tips.
A recent case addressed the issue of tip credits when credit cards are involved. In this instance, the employer deducted expenses from credit card tips for fees charged by the credit card companies. The court determined that this practice is not acceptable pursuant to the FLSA. However, because the amount of fees taken was minimal, the restaurant that employed this practice did so in good faith. Going forward however, the court noted that employers should be on notice that employers may not apply credit card tips as a credit toward minimum wage if they are deducting processing costs.
Courts are taking a closer look at tipping practices, and making efforts to ensure that they are carried out appropriately. If you are a tipped employee and have questions or concerns about your pay, please contact the experienced Atlanta wage and hour lawyers at Buckely Beal, LLP for an immediate consutlation.