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9 things to know about tipping for restaurant workers

Some restaurant workers depend on tips to make a living. New York has strict laws governing how employees and employers handle tips in a variety of situations. For the men and women working for tips, understanding these laws is crucial. Tips that aren't handled properly can lead to legal action against an employer.

1. Tip forms vary

Anything that guest gives a person directly involved in their service at the restaurant is a tip. This includes money left on credit cards, cash, checks and other forms of payment.

2. Tip credits are legal

Tip credits are amounts that employers can deduct from the hourly minimum wage if the employee has made that amount per hour. The actual tip credit varies by industry, number of employees, location, and date.

For example, as of Dec. 31, 2016, restaurant workers in New York City have a minimum wage of $11 if the employer has 11 or more employees. Of that minimum wage, $3.50 is a tip credit and $7.50 is a cash wage. If the employee makes $3.50 in tips for the hour, the employer can deduct the tip credit from the minimum wage and only pay the cash wage. Employers must provide employees written notice before or at hiring that this will occur.

3. Tip sharing is allowed

Tipped employees can share their tips with other employees who directly care for a guest. This is either employer directed or employee led. Employees must handle distribution. A percentage model should be readily available before the sharing occurs.

4. Tip pooling is allowed

Tip pooling between tipped and non-tipped employees on a shift if permissible. Employers might require this, but employees can also request it. The method for distributing the pooled money should be clear and noted before the distribution.

5. Withholding tips isn't allowed

Employers can't keep or demand that employees give the employer their tips. Employees must receive the tips intended for them.

6. Tip payment schedules vary

If a guest leaves a tip on a credit card for the server, the employer can keep the tip to include it in the employee's next paycheck. The employer can deduct the portion of the processing fee that applies to the tip.

7. All tips must be reported

Employees must report all tips to their employer. The employer must keep accurate records that differentiate tips from hourly wages.

8. Voluntary tip holding is possible

You can ask your employer to hold your tips for you and distribute them to you in your paycheck. This is strictly voluntary. You must request this in writing and your employer must comply with the request if it is made in accordance with the law.

9. Employees can use tips to pay for deductions

Employees who have self-paid benefits that are normally taken out of a paycheck can have these withheld from tips. Examples of deductions the employee can ask an employer to withhold from tip payments include union dues, insurance premiums, and 401k contributions. 

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