Fifth Circuit Affirms Employers Cannot Withhold Optional Expenses from Credit Card Tips
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APPLIES TO All Employers with Louisiana, Mississippi, and Texas Employees |
EFFECTIVE June 14, 2016 |
QUESTIONS? Contact HR On-Call |
Generally in the Fifth Circuit, employers can pay employees, who earn tips, less than the minimum wage as long as the employee receives enough in tips to make up the difference. If not, the employer must make up the difference to ensure the minimum wage is met. Though the rule seems simple, the complexity of tip credits—including situations such as when tips are shared—can get employers in trouble. The Fifth Circuit recently highlighted another danger zone, stating that employers cannot hold back portions of credit card tips to pay for optional expenses.
