Employee tips, tip theft, and tip protection laws.

Tip theft is illegal. With the exception of valid tip pooling arrangements, an employer may not keep any portion of an employee's tips. The federal Fair Labor Standards Act ("FLSA") was specifically amended in 2018 to protect employee tips.

Under the FLSA, an employer may not keep tips received by its employees for any purpose, including allowing managers or supervisors to keep any portion of employees’ tips, regardless of whether the employer takes a tip credit.

Also, the employer cannot take any portion of an employee's tips to cover certain employer related expenses. For example, employers cannot reduce a tip-credit paid employee's tips for things such as:

charging a tipped employee for customers who walk out without paying their bills,
charging a tipped employee for cash register shortages,
charging or making a tipped employee pay for uniforms,
charging a tipped employee the full menu price for employee meals (only the actual cost of the meal can be charged, and not the price that adds profit/menu price), and
charging or making a tipped employee pay for costs to have cash on hand to pay out tips at the end of a shift.

Also, if the tip credit paid employee has to deliver food using their personal vehicle, the employer must generally reimburse the employee for the use of that vehicle, including gas.

Also, if the employee is paid on a tip-credit basis (i.e. $2.13 per hour with tips increasing the average hourly rate to at least $7.25 minimum wage), the employer must give the employee advance notice of use of the tip-credit pay including the amount of the employee's cash wage, the amount of the tip credit claimed by the employer, that the amount claimed may not exceed the value of the tips actually received, that all tips received must be retained by the employee except for a tip pooling arrangement limited to employees who customarily and regularly receive tips, and that the tip credit shall not apply to any employee who has not been informed of all of these requirements.

If your employer violates the FLSA tip law, then they may owe you significant money. If your employer illegally keeps some or all of your tips, you may be owed double the amount of tips improperly kept by the employer. Also, if your employer uses a tip credit for the FLSA minimum wage law (e.g., pays you $2.13 per hour and relies on tips to make up the $5.12 difference to meet the $7.25 per hour FLSA minimum wage) and improperly keep tips or does not provide you with the required FLSA tip-credit notice, they will generally also have to pay you double the amount of the tip credit taken (e.g., $5.13 per hour) for all hours worked in all workweeks within the FLSA's statute of limitations (2 years that can be extended to 3 years).

The FLSA also requires an employer who violates the tip protection law to pay legal fees and costs to the prevailing employee's attorney. The FLSA does not require an employee to pay legal fees to the employer.

Contact Dallas attorney Allen Vaught to learn more about your tip law rights.