UNDERSTANDING MINNESOTA’S TIP LAWS: CAN EMPLOYERS REQUIRE TIP SHARING?
In Minnesota, gratuities are considered the property of the employee. Minnesota employers can be held liable if their tip sharing policies violate state or federal wage and hour laws. Minnesota employers cannot use employee’s tips to offset minimum wage requirements. Employers must pay tipped employees the full minimum wage regardless of their tip earnings. Our experienced employment attorneys have helped many employees recover lost tips and wages owed to them.
- Can my employer require me to share tips?
- Do my tips count toward minimum wage?
- Is it legal for my employer to require that employees turn over our tips for redistribution?
- I don’t want to pool my tips, but I don’t want to lose my job—what can I do?
- Contact Our Minnesota Employment Lawyers
Service employees, including wait staff, bartenders and other staff are often at the whims of their employers when it comes to tipping policies. Nationwide, many service positions involve sharing or pooling tips with other members of the staff. However, in Minnesota, no employer may require employees to share their gratuities or contribute tips to a fund or pool. Tips are considered the property of the employee directly serving the customer. (See Minnesota Department of Labor and Industry Fact Sheet on Tip Credit, Tip Sharing, and Tip Pooling.)
Do my tips count toward minimum wage?
No, tip credits are prohibited in Minnesota. Minnesota employers may not withhold tips and may not apply an employee’s tips toward the payment of minimum wage. Unlike other states that allow employers to reduce minimum wage so long as the employee earns enough in tips to make up the difference, Minnesota does not allow employers to count tips toward the employers’ minimum wage obligations. All pooled tips must be redistributed to employees by the end of the pay period in which they were earned.
Is it legal for my employer to require that employees turn over our tips for redistribution?
Under Minnesota law, individuals who perform the direct service should benefit directly from the gratuities paid. Minnesota courts have stated that tips belong to the employees and service workers cannot be forced to share their earnings. If employees agree to share tips without employer participation or coercion, an employer may safeguard shared tips to be redistributed, but only for those employees who agree to share. When these amounts are turned over, the employer can report the amounts received as gratuities for tax purposes.
I don’t want to participate in tip pooling, but I don’t want to lose my job—what can I do?
Minnesota courts have stated that pooling or sharing gratuities, “may not be a condition of employment.” Workers who feel coerced or pressured to participate in tip sharing can take legal action to protect their rights and earnings. Any employee who refuses to share tips and is harassed or coerced into participation should consult with an experienced wage and hour law attorney. Such policies could result in liability for employers and damages for employees. Employees can also access additional resources to better understand tipping laws and manage their tipping practices effectively.
If your employer forced you to pool or share tips with other employees, we want to hear from you. The employment lawyers at Wanta Thome are dedicated to protecting the wage and hour rights of Minnesota employees and provide a free initial consultation. to discuss your rights.
Direct Service and Tip Sharing
In Minnesota, direct service employees are entitled to keep their tips, and employers are prohibited from requiring them to share their tips with other employees. However, employees may voluntarily share their tips with other employees who provide direct service to customers. Direct service employees include wait staff, bartenders, and other staff who interact with customers. Employers must clearly communicate to employees that any tip sharing is voluntary and must be documented in writing.
Mandatory Service Charges and Credit Card Charges
In Minnesota, mandatory service charges are not considered tips and are not the property of employees. Employers may impose a mandatory service charge on customers, but they must clearly communicate to customers that the charge is not a tip and will not be distributed to employees. Credit card charges are also subject to specific rules in Minnesota. Employers may withhold a proportional amount of an employee’s tip to cover the processing fee, but they must clearly communicate their method of handling credit-card tips to applicants and employees.
Maintaining Accurate Payroll Records
Employers in Minnesota must maintain accurate payroll records, including records of tips received by employees. Employers must keep records of the amount of tips received by each employee, the amount of tips shared with other employees, and the amount of tips withheld for processing fees. Employers must also keep records of the method used to calculate the tip credit, if applicable. Accurate payroll records are essential to ensure compliance with Minnesota’s tipping laws and to prevent disputes with employees.
State and Local Tip Pool Laws
Minnesota has specific laws and regulations regarding tip pools. Employers are prohibited from requiring employees to participate in a tip pool, but employees may voluntarily participate in a tip pool. Employers must clearly communicate to employees that participation in a tip pool is voluntary and must be documented in writing. Employers must also ensure that the tip pool is fair and equitable, and that all employees who participate in the tip pool are aware of the terms and conditions of the pool. Additionally, employers must comply with federal and local laws regarding tip pools, including the Fair Labor Standards Act (FLSA).
Contact Our Minnesota Tip Sharing Lawyers
If your employer forced you to pool or share tips with other employees, we want to hear from you. The employment lawyers at Wanta Thome are dedicated to protecting the wage and hour rights of Minnesota employees and provide a free initial consultation. Contact us to discuss your rights.
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