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Tip credits and tip laws - Read the new DOL rules that apply to you

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Tipped restaurant employees: Read the new rules that affect your paycheck

The Fair Labor Standards Act (FLSA) has been updated with new rules that concern tipped employees' pay. The updates issued by the Department of Labor take effect in May 2011 and they affect tipped employees nationwide.

Tip Credits & Tip Pooling Laws

Restaurant employees are typically involved in tip-pools, or receive tip credits from their employers that should add up to minimum wage. The federal minimum wage is $7.25 an hour.

However, employers can use a tip credit to pay tipped employees below the minimum wage, as long as the credit and the employee's wages add up to the minimum wage.

Employers who use the FLSA "tip credit" to fulfill minimum wage requirements for their employees have new guidelines to follow. Employers who intend to use the tip credit provision must inform employees before doing so and employers must inform tipped employees of the following:

  • the direct wages paid to the tipped employee,
  • the amount used as tip credit, 
  • that the tip credit does not apply to an employee who has not been informed of the policy.

The rules also clarify that an employer cannot use its employee's tips for anything other than a tip credit or tip pool.

What you can do to recover your tips.

If you are a Texas tipped employee and you haven't been paid your fair wages and tip under the FLSA, you can order a free copy of "The 10 Biggest Mistakes that can Hurt Your Wage and Overtime Claim," to get more information about wage and overtime claims. You can also contact experienced Texas labor law attorneys toll-free at (888) 449-2068 for a free case review.

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