2024 Connecticut Restaurant Tip Pooling Laws | TipMetric

Connecticut has a significant service industry. Many employees within the service industry who earn tips should be aware of how their tips are handled in relation to employee and state rules.

Typically, service staff have a basic understanding of tipping at restaurants, hotels and other places of hospitality. What may not be as well-known are the rules that determine how tips should be handled by those establishments employing service staff.

General Information About Tips

Federal and state of Connecticut law has said restaurant tips belong to the employee, not the employer. This means that employers can’t ask staff to hand over their tips. There are exceptions when certain criteria are met.

· Tip credits can be taken. This means state law allows the employer to count some, or all, of the employee’s tips as part of its requirements regarding the minimum wage.

· If a valid tip pool does exist, then employees are obliged to pay part of those tips into a pool that is then shared by other employees within the restaurant.

There are resources online to help both employers and employees better understand how to use automated tip sharing software.

Tip Credits

Employees are owed a minimum wage per hour, according to federal or state minimum wage standards. The state of Connecticut has a minimum wage of $12.00. Connecticut does allow employers to take tip credits for employees. Employers are required to pay a minimum of $6.38 per hour and the employer can take a tip credit of $4.62 per hour. This is the case as long as the wait staff earns at least the minimum wage with their tips. For bartenders, employers are required to pay at least $8.23 per hour, where the employer can take a top credit of $2.77 per hour.

Tip Pooling Explained

In Connecticut, employers can require tip sharing, or tip pooling. Tip pooling involves the combining of tips earned by customer-facing staff and a percentage of that pool being shared with staff that assist those staff members who serve. Customer-facing employees receiving tips are only required to pool what is reasonable and are able to ensure that whatever amount they keep successfully meets the requirements for minimum wage. In Connecticut, there are specific guidelines employees are required to follow if they allow tip pooling at their establishments.

Those employees who support customer-facing staff are required to be part of the “chain of service” where a tip from a customer may be the result of their contribution to that service. Employees that qualify for “chain of service” staff may include wait staff, hosts, bartenders, buss staff and others. It does not include other staff that are not part of the “chain of service,” such as cooks, cashiers and dishwashers.

The Connecticut Department of Labor has determined that tips must be distributed in ways that are reasonable and fair and makes recommendations regarding it. To help employers who incorporate tip pooling in their establishments, automated tip pooling software is available to make it easier for owners, manager and service staff to accurately account for tip management and payroll processing.

Mandatory Service Charges

On occasion, a mandatory service charge is added to a customer’s bill to accommodate for things such as private parties, larger tables and other situations that require more staff attention. Many restaurants incorporate these practices, viewing it is an understood contract between the restaurant and the customer and not a direct result or indication of exceptional service delivered by the wait staff. In the state of Connecticut, this added charge is not a tip

As an incentive for establishments to no longer implement mandatory service charges if some or all portions of it are shared with the staff, the IRS created rule regarding this practice. If any part of the service charge is shared among staff, that amount must be considered as part of the wait staff’s wages rather than a tip. In addition, Social Security and Medicare withholding must be incorporated on the amount shared among staff. Furthermore, an amount provided by the customer that is more than the standard cost of food and taxes must be viewed as voluntary if it is to be categorized properly as a tip given to the staff.

Credit Card Fees

Customers often pay by credit card when dining out. In cases where an employer is charged a processing fee when accepting a credit card, and the customer pays a tip using that credit card, the employer is prohibited from deducting the employee’s share of the processing fee. While this rule varies from state to state, Connecticut does not address it.

Responsibility of the Employer

Labor rules, laws and guidelines in the state of Connecticut should be understood by employers and persons employed by the hospitality industry. An understanding of such information helps employees know the impact on their income. Utilizing automated tip distribution software for restaurants will also go a long way in helping employers and their employees more accurately manage tips and income.