Fair Labor Standards Act - Tip Credits and Tip Pools

Tip Credits and Tip Pools

Under the FLSA, an employer must pay each employee the minimum wage, unless the employee is "engaged in an occupation in which he or she customarily and regularly receives more than $30 a month in tips." However, the employee must be allowed to keep all of their tips, either individually or through a tip pool. Also, a tip pool may contain only "employees who customarily and regularly receive tips." "The phrase 'customarily and regularly' signifies a frequency which must be greater than occasional, but which may be less than constant."

While the nomenclature of a job title is not dispositive, the job of "busboy" is explicitly validated for tip-pool inclusion by an authoritative source. "A busboy performs an integral part of customer service without much direct interaction, but he does so in a manner visible to customers.... Thus, for a service bartender to be validly included in a tip pool, she must meet this minimal threshold in a manner sufficient to incentivize customers to 'customarily and regularly' tip in recognition' of her services (though she need not receive the tips directly).