Low wages and unstable paychecks are common for restaurant employees, hotel employees, servers, and others in the service industry. These employees generally work for tips in North Carolina, allowing the employer to pay a lower hourly rate. Under North Carolina and Federal wage and hour law, tips received by employees belong to the employee, not the employer. If you are owed unpaid tips or minimum wages or have filed a complaint with the Department of Labor about your wages or paychecks, contact wage attorney Karl S. Gwaltney at (919) 526-0450.
What Counts as a Tip
What counts as a tip for purposes of minimum wage and overtime pay can be tricky. For example, some restaurants charge mandatory service charges on bills with large parties. This amount is not considered a tip but a service charge in North Carolina. Most employers give this money to the waiter or server as a tip. However, they are not obligated to consider this amount as a tip. For money given by a customer to be considered a tip for minimum wage purposes, specific requirements must be met. First, the tip payment must be voluntary. The customer must have the right to determine the tip amount, and an employer cannot set the tip payment. Additionally, the customer must have the right to decide who receives the tip payment.
Your Legal Rights
The North Carolina Wage and Hour Act and the Federal Fair Labor Standards Act do not allow an employer to take an employee’s tip directly. However, a valid tip pool enables employers to force employees to pay part of their tips into a tip pool to be shared with other employees. There are specific rules that an employer must follow to have a valid tip pool.
Even though an employer cannot keep an employee’s tips, the employer can receive a credit for those tips earned as if the employer paid the employee directly. Employers may pay employees who work for tips $2.13 an hour, as long as they earn enough in tips to bring their total hourly wage to the minimum wage. The minimum wage in North Carolina is $7.25 per hour. The law designates this as a “tip credit.” If the tipped employee does not earn enough in tips during a shift to meet the minimum wage requirements, the employer has to pay the difference between the amount earned and the minimum wage. To utilize the tip credit, employers must notify the employee in advance.
Dual Jobs
If an employee has dual jobs as a tipped employee and a non-tipped employee, the minimum wage calculation changes. Under Federal minimum wage laws, if an employee spends more than twenty percent (20%) of the workweek performing non-tipped duties, the employer has to pay the full minimum wage for those hours and cannot take a tip-credit. For example, a restaurant employee who spends six (6) hours per day earning tips by waiting tables and two (2) hours washing dishes must be paid the full $7.25 minimum wage per hour for the time spent washing dishes. The employer is not entitled to a tip credit for that time, during which the restaurant employee does not work for tips.
Contact an Unpaid Tip Attorney
Maginnis Howard represents wage and hour clients across the Carolinas from our Raleigh, Charlotte, and Fayetteville offices. Contact the firm to discuss your overtime claim today. The unpaid wages attorneys at Maginnis Howard frequently represent employees in overtime disputes on a contingency basis. That means no attorney fees are owed up front, and fees are only owed if you recover compensation. If you are working for tips in North Carolina and being improperly compensated, contact us at (919) 526-0450 or info@carolinalaw.com.
