North Carolina provides generous protections for servers/waitstaff in their rights to receive their tips earned. Employers cannot take any portion of your tipped wages (other than for a pro-rata share of credit card wages). The law prohibits employers from using the tip-credit to avoid fair compensation for non-tipped work, such as cleaning, food preparation, dish washing, and other tasks not performed in front of a customer. While North Carolina law allows tip-pooling, most of the tip payment must go to the employee who received the tip. Non-tip-based employees cannot receive a portion of the tip-pool.
Tipping Regulation in North Carolina
North Carolina does not allow employee tips to be shared with “back of the house” employees, such as chefs, even specialty chefs, such as those at a sushi restaurant. Managers cannot claim any portion of an employee’s tips. More importantly, North Carolina does not allow the business owner, as the employer, to take any portion of an employee’s tipped wages.
Additionally, as employers attempt to increase efficiency while decreasing labor costs, tip-based employees are often asked to do work that does not require them to interface with customers. This is an acceptable practice so long as the non-tipped work is calculated and compensated separately from the tipped work. Tipped employees must receive at least minimum wage for the time spent performing non-tipped work. An employer may not use tipped compensation as a set-off. For example if a server is making $15/hr for their tipped work based on a $2.13 hourly rate, an employer may not ask the employee to spend an hour doing food preparation unless that hour is paid separately even though the server would still be making more than minimum wage if they received $15 for an hour spent doing tipped work and an hour doing non-tipped work.
Credit Card Tips
Employers often delay the payment of credit card-based tips to employees as well. This is improper under state and federal wage laws. Employers must pay employees credit card-based tips, like those collected by a POS system, by the next scheduled pay period. Employers can withhold a pro-rata portion of the credit card service charge that the employer must pay. However, employers have been known to withhold more than they are charged in fees. That is a Wage and Hour/FLSA violation as well.
North Carolina law allows tip-based employees to engage in tip pooling. However, the employee who received the tip is entitled to 85% of that tip. The employees must be aware of the tip-pooling arrangement prior to the pay period, not the day it is implemented.
If you are an employee who receives tips, whether you work in the restaurant/hospitality industry or any other tip-based industry, it is essential to understand your rights. Employers cannot avoid federal minimum wage requirements or keep labor costs down by withholding portions of tipped money to cover expenses, ask tip-based employees to perform non-tip-based tasks without separately compensating them, delaying payment on tips through credit cards, charging excessive service charges on credit-card based tips, or engaging in any other behavior which deprives the employee of the payment received for their hard work.
Contact an Unpaid Wage Attorney
Contact our wage and hour attorneys for a free consultation at (919) 526-0450 or submit a new case inquiry here. Maginnis Howard is a civil litigation firm with wage and hour/overtime lawyers handling matters throughout the Carolinas. We also handles cases throughout the state where wage practices apply to groups of employees. Contact the firm to discuss your tip-based rights today.
