New Clients Email:

New Clients Email

Assistance for Employees Not Receiving Tipped Wages


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).  Employers are also prohibited from using the tip-credit to avoid fair compensation for non-tipped work, such as cleaning, food preparation, dish washing and other tasks which are not performed in front of a customer.   While tip-pooling is allowed in North Carolina, most of the tip payment must go to the employee who received the tip and non-tip-based employees cannot receive a portion of the tip-pool.

North Carolina does not allow employee’s tips to be shared with “back of the house” employees such as chefs, even specialty chefs such as at a sushi restaurant. Managers are also not entitled to claim any portion of an employee’s tips.  More importantly, North Carolina does not allow the owner of the business as the employer to take any portion of an employee’s tipped wages.

Contact our wage and hour labor attorneys for a free initial consultation at 919.526.0450 or submit a new case inquiry here. Maginnis Howard is a North Carolina civil litigation firm with wage and hour/overtime lawyers handling matters throughout the state. The firm also handles cases throughout the state where wage practices apply to groups of employees and not just a single employee. Contact the firm to discuss your tip-based rights today.

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 labor practice so long as the non-tipped work is calculated and compensated separately than 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 waiter 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 waiter 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.

Employers often will delay the payment of credit card based tips to employees as well.  This is improper under state and federal wage laws. Employers must pay any credit-card based tips to the employee 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 actually being charged in fees. That is a Wage and Hour/FLSA violation as well.

North Carolina does allow for tips to be pooled amongst tip-based employees. However, the employee who received the tip is entitled to receive 85% of that tip.  The employees must be aware of the tip-pooling arrangement prior to the pay period, not the day, in which it is implemented.

If you are an employee who receives tips, whether that be someone who works in the restaurant/hospitality industry or any other tip-based industry, it is important 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.

If you are a server, or group of servers, who is not receiving their fair amount of tips, contact the Raleigh wage and hour labor attorneys of Maginnis Howard at (919) 526-0450 or submit a new case inquiry here.