Florida Tip pooling and Tip credit Laws | TipMetric 2020

(Note: If you are using Excel (or Pen & Paper) for Restaurant Tips Distribution, visit TipMetric.com to learn how to simplify the process and eliminate mistakes.)

In Florida, service industry employees who earn tips should know about how their tips are handled, what their rites are and what the state law instructs.

While we can assume that virtually all wait staff understand what a tip is, what may not be known are the laws and rules that dictate how tips should be handled and treated by establishments employing wait staff. For information regarding minimum wage, tips rules, overtime standards and additional guidelines on wages, readers may go to the website of the Florida Department of Economic Opportunity.

Basic Tip Information

Federal law and most states have indicated that tips belong to the employee, not the employer. Employees don’t have to hand over their tips to employers unless there are one of these exceptions in place:

· A tip credit is in place where all or part of the employee’s tips are counted toward their minimum wage requirements. Florida does allow for a tip credit.

· A tip pool is in place where a portion of tipped staff will provide some of their tips into a pool to be shared with other employees.

Tip Credits

Like all other states, Florida has minimum wage standards. While the federal minimum wage is $7.25 per hour, the minimum wage in Florida is $8.46 as of 2019. Florida does allow employers to take a tip credit of up to $3.02 per hour, resulting in the fact that employers may pay tipped employees as little as $5.44 per hour toward their minimum wage. If this minimum wage and the employee’s tips do not add up to the state’s minimum wage, the employer must make up the difference.

Tip Pooling

Florida allows for tip pooling and employers must notify the employee in advance if one exists. Employees are not required to contribute to a tip pool for employees that normally receive their own tips, such as dishwashers, cooks and others.

Tip pooling software is available to ensure mistakes and disputes are eliminated, making it easier for establishments to save time processing payroll with accuracy.

Mandatory Service Charges

A mandatory service charge is sometimes added to a customer’s bill if warranted, for things such as larger tables, private parties or similar circumstances. This is viewed as part of the contract between the customer and the restaurant and not an indication of good service by the wait staff. The employee has no legal right to any monies collected by employers as part of a mandatory service charge.

The Internal Revenue Service, in 2014, created an incentive for establishments to no longer charge mandatory service charges if any portion of it is shared with the staff. If part of the service charge is shared with staff, then it must be categorized as wages instead of tips, and, as a result, must have Social Security and Medicare withheld on these amounts. Any amount given by the customer above the normal cost of food and taxes must be voluntary if it is to be properly categorized as a tip to the service staff.

Credit Card Charges

If an employer pays a processing fee to accept credit cards from customers, and that customer leaves a tip as part of the credit card payment, whether the employer is allowed to deduct the employees share of the credit card processing charge is not addressed in Florida law. As such, the employer may or may not pass along the processing fee to the tipped employee.

Persons employed within the hospitality industry in Florida should have an understanding of the state’s rules and rites as well as an understanding of how their income may be impacted.