Can My Boss Take My Tips? The Laws of Tip Ownership

Employees in the Florida service industry strive to deliver outstanding customer service for many reasons. For some, the prospect of earning tips serves as a rewarding incentive for a job well done. For others, tips are essential for covering their basic living expenses, making excellent service not just a goal but a necessity.

You may ask yourself, “Can my boss take my tips?” The answer isn’t as simple as it might seem. The Fair Labor Standards Act (FLSA) is key to employee tips. This law outlines an employer’s responsibilities regarding minimum wage, overtime pay, and how tips should be handled. Understanding these regulations is essential to knowing your rights.

What Does the Law Say About Employers Taking Tips?

The Fair Labor Standards Act (FLSA), established in 1938, has undergone numerous amendments to adapt to evolving workplace needs. However, its core purpose remains the same: protecting employees’ rights to fair wages and setting clear restrictions on how employers manage their workers’ earnings. So, is it illegal to withhold tips from employees?

Under the FLSA, employers generally have no legal claim over their employees’ tips. Even if employees earn more than the minimum wage through tips, employers cannot take action to limit, withhold, or reduce those earnings.

Additionally, all employees in Florida must receive at least the applicable minimum wage. For non-tipped employees, this means the full state minimum wage, which is adjusted annually for inflation. Florida allows a tip credit for tipped employees, meaning employers may pay a lower direct hourly salary, as long as the employee’s tips combined with the base wage meet or exceed the full minimum wage. If the total falls short, the employer is legally required to make up the difference to ensure compliance.

Can Employers Take Tips From Employees?

No, employers cannot take tips from employees under federal law. The FLSA explicitly prohibits employers from keeping any portion of tips that employees receive, even if those tips push their earnings well above the minimum wage.

Employers may only handle tips in limited circumstances, such as:

• Ensuring proper distribution in a legal tip pool (where tips are shared relatively equally among tipped employees)
• Withholding credit card processing fees from tips is not allowed under Florida law. Employers must pay tipped employees the full tips left on a credit card, regardless of processing costs.

Employers cannot take tips for themselves, use tips to offset payroll expenses, or reduce base wages based on tip earnings.

Employees may have legal recourse to recover their earnings and seek additional compensation if an employer unlawfully withholds tips.

Employer Withholding Tips: Is It Legal?

In most cases, employees are entitled to keep 100% of their tips. If, for example, an employee earns $750 in tips in a single pay period, the employer cannot reduce their wages or take a portion of those tips just because they believe the employee earned “too much.”

Additionally, an employer cannot withhold tips through an illegal tip pool. If an employer or manager takes a share of employees’ tips in a tip pool, they violate the FLSA and illegally withhold wages.

However, there is one notable exception: mandatory service fees.

Service Fees vs. Tips

Some establishments charge service fees instead of relying on customer tipping. These service fees are not considered tips under the FLSA, meaning employers can legally keep them.

For example, if a restaurant adds a 20% service charge to large party orders, that service fee belongs to the employer, not the employee, even if customers leave no additional tip. However, the employer must compensate for the difference if an employee’s total wages (including base pay and any service fees received) fall below the minimum wage.

The Role of Managers in Tip Collection

The Fair Labor Standards Act (FLSA) and other applicable laws provide clear guidelines on managers’ roles regarding employee tips: Managers should not take employee tips. Tips belong solely to the employees who earn them and should remain untouched by management. But what if they just ignore the law? Are managers allowed to take tips? 

Managers cannot claim a portion of employees’ tips, even if an employee’s total earnings—including wages and tips—exceed the minimum wage. As of September 30, 2024, Florida’s minimum wage for non-tipped employees is $13.00 per hour. Employers may apply a tip credit of up to $3.02, requiring them to pay tipped employees a direct cash wage of at least $9.98 per hour.

For example, if a tipped employee works an 8-hour shift, they must earn at least $104.00 in wages and tips to meet the minimum wage requirement. If they earn $150 (wages plus tips), the employer cannot take the additional $46 in tips under any circumstances. Tips belong entirely to the employee.

Can Managers Take Tips?

No, managers cannot take employee tips under the Fair Labor Standards Act (FLSA). The law strictly prohibits management from keeping any portion of employee tips, whether through direct collection or indirect means. Even if an employee earns well above minimum wage due to tips, the manager still has no right to withhold or collect those tips.

The only time management has a role in tips is when operating a tip pool, but even then, they cannot participate in the pool. Their role is strictly administrative, ensuring that tipped employees receive their fair share.

Additionally, managers and supervisors are not allowed to take tips from employees, even if they occasionally perform the same duties as tipped employees. If a manager directly serves customers, they still cannot collect tips unless the tip was explicitly given for their service and was not part of a tip pool.

Managers Can:

• Set up a tip pool (but not participate in it)
• Ensure all tipped employees receive at least minimum wage
• Guide how tips are distributed

Managers Cannot:

• Take any portion of employee tips
• Participate in tip pooling
• Use tips to offset other business costs

Employees who believe their manager is illegally taking tips may have legal options to recover lost wages and ensure compliance with labor laws.

Can Salaried Managers Collect Tips?

There is considerable confusion among employees over the question, “Can managers take tips if they work?” This is largely the result of employers using a rather expansive definition of the position of “manager.”

These employers assign employees with experience as managers and assistant managers over other employees while requiring those “managers” to do the same work as the employees they supervise.

If the manager receives a tip for a service that the manager alone provides to a customer, then generally, that manager will be allowed to keep the tip. If any other employee assists the manager, then any tip received belongs to the employee, not the manager.

Understanding Tip Pooling Laws

Your employer may not personally pocket your tips or allow managers to take a share. Instead, they might require you and other tipped employees to contribute some of your earnings to a shared “tip pool.” All tipped employees receive a portion of the tips collected from this communal pot.

Tip pooling comes with both benefits and drawbacks. On the one hand, if your shift happens to be slower or your customers are less generous with tipping, the pooled tips ensure your earnings still reflect the overall success and productivity of the business during your shift. This system can provide a financial cushion during quieter periods or when tips are sparse.

Not all employees are enthusiastic about tip pooling. If you have a particularly successful night, earning generous tips from your customers, you might feel you’ve rightfully earned those rewards. Sharing your hard-earned tips with other employees may seem unfair, especially if you believe it benefits individuals who haven’t worked as diligently.

Although tip pooling is legal in Florida, it comes with strict guidelines. For instance, managers and supervisors are prohibited from participating in employee tip pools. Additionally, every employee involved in the pool must still earn at least the minimum wage, regardless of how the tips are distributed.

If your employer utilizes a tip credit, it can only apply to the portion of tips you are allowed to keep, not the total amount you contribute to the pool. Understanding these rules is crucial to ensure fair treatment and compliance with the law.

For instance, imagine you earned $90 in tips but only kept $30 after the tips were distributed through a tip pool. In this case, your employer can only claim a $30 credit toward your wages, as the remaining $60 was allocated to your co-workers. 

Additionally, employers must notify you about the tip pool before implementing it or requiring your participation.

Legal Recourse if Your Tips Are Taken or Withheld

Facing a situation where your employer illegally withholds your tips can be intimidating, leaving you feeling powerless to challenge the issue. However, you have legal rights under the FLSA and other state and federal laws. It’s essential to understand these protections and take action to uphold them.

If you suspect or know that your employer is withholding your tips, it’s crucial to contact an experienced employment and labor law attorney as soon as possible. A skilled Wenzel Fenton Cabassa attorney can assess the specifics of your case to determine if an FLSA violation has occurred. They can also act quickly to preserve critical evidence, such as pay statements and receipts.

Should your employer refuse to pay what you are rightfully owed, contact the experienced wage and hour attorneys at Wenzel Fenton Cabassa, P.A. We can help you evaluate your situation and take the appropriate legal steps to recover unpaid wages. Additionally, you may be entitled to reimbursement for the costs associated with pursuing your legal claim. Employers who willfully or repeatedly violate the FLSA can also face penalties of up to $1,000 per violation.

You don’t have to accept unfair treatment. You can protect your rights and hold your employer accountable by taking the appropriate legal steps.

Get Assistance From an Attorney

If you’re not receiving the tips you’ve earned or have concerns about your pay, it’s crucial to act quickly. Contact the experienced team at Wenzel Fenton Cabassa P.A., a Florida employment law firm with over 30 years of fighting for workers’ rights. 

At Wenzel Fenton Cabassa P.A., we are dedicated to helping employees achieve the justice they deserve. As trusted advocates and advisors, we leverage our deep knowledge of state and federal labor laws to protect your workplace rights and ensure fair treatment.

Get in touch with us today for a free case evaluation. Our experienced Florida wage dispute attorneys are here to provide the guidance and support you need.