29 C.F.R. § 531.55
Examples of amounts not received as tips
(a) A compulsory charge for service, such as 15 percent of the amount of the bill, imposed on a customer by an employer's establishment, is not a tip and, even if distributed by the employer to its employees, cannot be counted as a tip received in applying the provisions of sections 3(m)(2)(A) and 3(t). Similarly, where negotiations between a hotel and a customer for banquet facilities include amounts for distribution to employees of the hotel, the amounts so distributed are not counted as tips received.
(b) As stated above, service charges and other similar sums which become part of the employer's gross receipts are not tips for the purposes of the Act. Where such sums are distributed by the employer to its employees, however, they may be used in their entirety to satisfy the monetary requirements of the Act.
Notes of Decisions
Cited in 41
cases (8 in the last 5 years), 1985–2024 · leading case: Hart v. Rick's Cabaret Int'l Inc., 967 F. Supp. 2d 901 (S.D.N.Y. 2013).
Hart v. Rick's Cabaret Int'l Inc., 967 F. Supp. 2d 901 (S.D.N.Y. 2013). “” 29 C.F.R. § 531.55 (a). The DOL’s regulations provide that “service charges and other similar sums which become part of the employer’s gross receipts are not tips for the purposes of the Act.”
Wai Tom v. Hosp. Ventures LLC, 980 F.3d 1027 (4th Cir. 2020). “” 29 C.F.R. § 531.55 (a). Instead, it is a service charge.”
Laura McFeeley v. Jackson Street Ent., 825 F.3d 235 (4th Cir. 2016). “” 29 C.F.R. § 531.55 (a). There are at least two prerequisites to counting “service charges” as an offset to an employer’s minimum-wage liability.”
Winans v. W.A.S., Inc., 758 P.2d 503 (Wash. Ct. App. 1988). “According to Henry's, the amendment affected only "tipped employees," as defined in section 3(t) but limited by 29 C.F.R. § 531.55 (a), which distinguishes tipped employees from employees who by prior agreement turn over their tips to the employer.”
Hurst v. Youngelson, 354 F. Supp. 3d 1362 (N.D. Ga. 2019). “Offsetting Minimum Wage Obligations Plaintiff moves for summary judgment on whether Defendants have an offset defense. (Dkt. 86-6.) Defendants do not challenge this issue.”
Heatherly v. Hilton Hawaiian Vill. Jt. Venture, 893 P.2d 779 (Haw. 1995). “6(B), supra note 3. Gratuities are defined as “any gift or payment given by a guest or customer for service rendered.”
Hart v. Rick's Cabaret Int'l, Inc., 60 F. Supp. 3d 447 (S.D.N.Y. 2014). “imposed on a customer by an employer’s establishment,” 29 C.F.R. § 531.55 (a), and distributed by the employer to its employees, “may be used in their entirety to satisfy the monetary requirements of the Act,” 29 C.”
Reich v. Priba Corp., 890 F. Supp. 586 (N.D. Tex. 1995). “” 29 C.F.R. § 531.55 (b) (1993). 63. The fee that an entertainer charges for a table dance is more closely related to a tip than to a wage.”
Melissa Compere v. Nusret Miami, LLC, 28 F.4th 1180 (11th Cir. 2022). “See 29 C.F.R. § 531.55 . Section 531.55 (a) explains that: A compulsory charge for service, such as 15 percent of the amount of the bill, imposed on a customer by an employer’s establishment, is not a tip .”
Salinas v. Starjem Restaurant Corp., 123 F. Supp. 3d 442 (S.D.N.Y. 2015). “The Court does not reach the question of whether Vosilla is a tip-ineligible manager under the FLSA because “compulsory charge[s] for service” — like Fresco’s service charge and administration fee for private parties — are not considered tips under the FLSA, 29 C.F.R. § 531.55…”
Barenboim v. starbucks, Winans v. Starbucks Corp., 698 F.3d 104 (2d Cir. 2012). “Thus, under New York law, an employer may not retain any part of a compulsory charge that it purports to collect to compensate its employees, while under federal law, the same employer may retain portions of that charge and still claim a tip credit.”
Sec'y U.S. Dep't of Labor v. Bristol Excavating, Inc., 935 F.3d 122 (3rd Cir. 2019). “See 29 C.F.R. § 531.55 (a) ("A compulsory charge for service, such as 15 percent of the amount of the bill, imposed on a customer by an employer's establishment, is not a tip and, even if distributed by the employer to its employees, cannot be counted as a tip[.”
— 29 C.F.R. § 531.55(a) — 2 cases
Reich v. ABC/York-Estes Corp., 157 F.R.D. 668 (N.D. Ill. 1994).
Luiken v. Domino's Pizza, LLC, 654 F. Supp. 2d 973 (D. Minnesota 2009).
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