Illegal Tip Practices: What Every Tipped Worker Should Know
For many restaurant, bar, and service industry employees, tips make up a significant part of their income. But too often, employers misuse or unlawfully withhold tips. Both federal and Pennsylvania law regulate how tips must be handled, and when employers cross the line, it may amount to wage theft.
Tipped Minimum Wage Under Federal and Pennsylvania Law
- FLSA (federal law): Employers may pay tipped employees as little as $2.13 per hour, so long as tips bring total earnings up to at least $7.25 per hour.
- PMWA (Pennsylvania law): Employers may pay tipped employees as little as $2.83 per hour, so long as tips bring total earnings up to at least $7.25 per hour.
Under either the FLSA or the PMWA, if your wages plus tips do not equal at least the minimum wage of $7.25 per hour, your employer must make up the difference.
Common Illegal Tip Practices
- Tip Pooling and Sharing With Management
Employers may require tip pooling among employees who customarily receive tips (like servers, bartenders, and bussers). However, it is illegal for managers, supervisors, or back-of-house staff who do not regularly receive tips to take part in a tip pool.
- Deducting for Credit Card Fees
Under Pennsylvania law, employers are prohibited from deducting credit card or other payment processing fees from employees’ tips.
- Misuse of the Tip Credit
Employers taking a tip credit must follow strict rules. They must notify employees of their intent to take a tip credit, ensure tips actually bring wages up to the minimum wage, and cannot assign excessive non-tipped duties.
The 80/20 Rule in Pennsylvania
The Department of Labor rescinded the federal “80/20 rule” under the FLSA, but Pennsylvania continues to enforce it. As a result, tipped employees in Pennsylvania:
- Cannot spend more than 20% of their shift on non-tipped duties (like cleaning, preparing food, ordering supplies).
- If they exceed this threshold, they must be paid the full minimum wage for the excess time spent on non-tipped duties.
Why It Matters
Even small amounts of withheld or misapplied tips can add up quickly, especially when spread across an entire staff. These violations not only reduce employees’ pay but also often lead to class or collective actions on behalf of groups of workers.
Protecting Your Tips and Your Rights
If your employer has taken your tips, forced you into an illegal tip pool, or violated Pennsylvania’s tipped wage laws, you may be entitled to recover lost wages, damages, and attorneys’ fees.
At Wood Legal, we represent servers, bartenders, and other tipped employees across Pennsylvania in wage and hour cases. If you believe your tips have been mishandled, contact us for a free case evaluation.
