The employer must provide the following information to a tipped employee before the employer may use the tip credit:
- The amount of cash wage the employer is paying a tipped employee which must be at least $2.13 per hour;
- The additional amount claimed by the employer as a tip credit, which cannot exceed $5.12 (the difference between the minimum required cash wage of $2.13 and the current minimum wage of $7.25);
- That the tip credit claimed by the employer cannot exceed the amount of tips actually received by the tipped employee;
- That all tips received by the tipped employee are to be retained by the employee except for a valid tip pooling arrangement limited to employees who customarily and regularly receive tips; and
- That the tip credit will not apply to any tipped employee unless the employee has been informed of these tip credit provisions.
The employer may provide oral or written notice to its tipped employees informing them of items 1-5 above. An employer who fails to provide the required information cannot use the tip credit provisions and therefore must pay the tipped employee at least $7.25 per hour in wages and allow the tipped employee to keep all tips received.
Read more here. LRA Members with questions, call (504) 454-2277.