(a) In determining compliance with the wage payment requirements of the Act, under the provisions of section 3(m)(2)(A) the amount paid to a tipped employee by an employer is increased on account of tips by an amount equal to the formula set forth in the statute (minimum wage required by section 6(a)(1) of the Act minus cash wage paid (at least $2.13)), provided that the employer satisfies all the requirements of section 3(m)(2)(A). This tip credit is in addition to any credit for board, lodging, or other facilities which may be allowable under section 3(m).
(b) As indicated in § 531.51, the tip credit may be taken only for hours worked by the employee in an occupation in which the employee qualifies as a “tipped employee.” Pursuant to section 3(m)(2)(A), an employer is not eligible to take the tip credit unless it has informed its tipped employees in advance of the employer's use of the tip credit of the provisions of section 3(m)(2)(A) of the Act, i.e.: The amount of the cash wage that is to be paid to the tipped employee by the employer; the additional amount by which the wages of the tipped employee are increased on account of the tip credit claimed by the employer, which amount may not exceed the value of the tips actually received by the employee; that all tips received by the tipped employee must be retained by the employee except for a tip pooling arrangement limited to employees who customarily and regularly receive tips; and that the tip credit shall not apply to any employee who has not been informed of the requirements in this section. The credit allowed on account of tips may be less than that permitted by statute (minimum wage required by section 6(a)(1) minus the cash wage paid (at least $2.13)); it cannot be more. In order for the employer to claim the maximum tip credit, the employer must demonstrate that the employee received at least that amount in actual tips. If the employee received less than the maximum tip credit amount in tips, the employer is required to pay the balance so that the employee receives at least the minimum wage with the defined combination of wages and tips. With the exception of tips contributed to a tip pool limited to employees who customarily and regularly receive tips as described in § 531.54, section 3(m)(2)(A) also requires employers that take a tip credit to permit employees to retain all tips received by the employee.
[85 FR 86790, Dec. 30, 2020]
Notes of Decisions
Lindsay Rafferty v. Denny's, Inc., 13 F.4th 1166 (11th Cir. 2021).
· cites it 11× “Here, Rafferty asserts that Count One presses claims that the Department failed to comply with the requirements of 29 C.F.R. § 531.59 (b) and 516.28(a)(3). We review each liability theory in turn.”
Driver v. AppleIllinois, LLC, 917 F. Supp. 2d 793 (N.D. Ill. 2013).
· cites it 8× “29 C.F.R. § 531.59 . The IMWL does not include such a specific provision relating to information about the tip credit, although it does contain a general notice provision.”
Dorsey v. TGT Consulting, LLC, 888 F. Supp. 2d 670 (D. Maryland 2012).
· cites it 4× “The new rule, codified at 29 C.F.R. § 531.59 (b), includes a more detailed notice requirement than courts had previously mandated.”
Wai Tom v. Hosp. Ventures LLC, 980 F.3d 1027 (4th Cir. 2020).
“See 29 C.F.R. 531.59(a). 6 This same tip credit can be applied to an employer’s overtime obligations.”
Nat'l Restaurant Ass'n v. Solis, 870 F. Supp. 2d 42 (D.D.C. 2012).
· cites it 6× “§§ 611 , 702 (2006), when DOL promulgated a new regulation, 29 C.F.R. § 531.59 (b) (2011), concerning an employer’s obligation to inform tipped employees of the “tip credit” requirements of the Federal Labor Standards Act of 1938 (“FLSA”), 29 U.”
Driver v. AppleIllinois, LLC, 890 F. Supp. 2d 1008 (N.D. Ill. 2012).
· cites it 3× “’ ” 29 C.F.R. § 531.59 (b). Under either the FLSA or the IMWL, that means an occupation in which tips are customarily and regularly paid.”
Alec Marsh v. J. Alexander's LLC, 905 F.3d 610 (9th Cir. 2018).
“29 C.F.R. § 531.59 . If the employee’s tip credit wage and tips do not meet minimum wage, however, the employer must make up the difference.”
Solis v. Lorraine Enter., Inc., 769 F.3d 23 (1st Cir. 2014).
“§ 203(m); 29 C.F.R. § 531.59 . This exception is available to an employer only if certain conditions are met.”
Bittencourt v. Ferrara Bakery & Café Inc., 310 F.R.D. 106 (S.D.N.Y. 2015).
“s an employer who wishes to claim tip credits toward the wages of its tipped employees to “inform[] its tipped employees in advance of the employer’s use of the tip credit” by providing the employee with notice of the base cash wage and the amount of the tip credit increase,…”
White v. 14051 Manchester Inc., 301 F.R.D. 368 (E.D. Mo. 2014).
· cites it 2× “§ 203 (m); 29 C.F.R. § 531.59 ). 8 Plaintiffs point to the Department of Labor Field Operations Handbook which provides that where an employer does not strictly observe the provisions of Section 3(m) of the FLSA, no tip credit may be claimed and the employees are entitled to…”
Kubiak v. S.W. Cowboy, Inc., 164 F. Supp. 3d 1344 (M.D. Fla. 2016).
“Title 29 C.F.R. § 531.59 explains that, “[w]ith the exception of tips.”
— 29 C.F.R. § 531.59(a) — 2 cases
Wai Tom v. Hosp. Ventures LLC, 980 F.3d 1027 (4th Cir. 2020).
“See 29 C.F.R. 531.59(a). 6 This same tip credit can be applied to an employer’s overtime obligations.”
— 29 C.F.R. § 531.59(b) — 3 cases
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