Georgia Tip pooling and Tip credit Laws | TipMetric 2020

Restaurant Tip Pooling Laws
4 min readSep 17, 2019

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Tip Pooling, Tip Sharing, Tip Out Software for Restaurants & Bars Georgia minimum wage for tipped employees
(Note: Most businesses track tips on complex spreadsheets, which is labor intensive and prone to error. Instead, TipMetric.com has developed a better solution. This innovative web app is purpose built to automate & make tips distribution safe & secure.)

For Georgia, service industry employees who earn tips can find more information about Georgia minimum wage, tip rules and standards for overtime pay at the website for the Georgia Department of Labor.

The Fundamentals About Tips

To begin, federal law and state of Georgia law has determined that a restaurant tip belongs to the employee rather than the employer. This means that employers cannot simply ask staff to hand over tips. With that said, there are exceptions if certain criteria are met.

· A tip credit can be taken, meaning that state law allows the employer to count some of all of the employee’s tops as part of its obligation towards minimum wage.

· A valid tip pool exists, and under federal law and most state laws, employees are required to pay part of their tips into a pool that is then shared among other employees within the establishment.

Tip Credits

Due to the federal minimum wage and Georgia minimum wage (which happens to be the same), employees are owed at least $7.25.

Because of the tip credit in Georgia, employees may pay their staff less than the minimum wage (at least $2.13 per hour while taking a tip credit of $5.12 per hour), with the understanding that their tips contribute to their earnings and actually meet the minimum wage standard. If the employee does not make enough tips to meet that minimum during a week or pay period, the employer must make up that difference.

Pooling Tips

Georgia law does allow employers to require tip sharing and tip pooling and that pool is shared among staff that assist in serving customers as part of their regular job duties. Employees receiving tips are only required to contribute what is reasonable and may also ensure that whatever they do keep meets the minimum wage requirements. The pool is only to be shared among qualified staff and may not be taken or held by management or ownership. To help make tip pooling easier, a tip pooling calculator is available and can be leveraged by establishments hoping to provide clarity and accuracy for employees.

Multiple Jobs

There may be situations where tipped employees have multiple jobs outlines in their job description or responsibilities. In an environment where an employee, during an 8-hour shift, waits tables for 6 of those hours but then be assigned other support duties outside of the restaurant for the remaining two hours, federal law indicates that a tip credit cannot be claimed by the employer for those 2 hours outside of the restaurant. A tip credit can be claimed if the employee is handling tasks related to serving the customer, such as restocking the salad bar, making coffee or rolling silverware.

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. In Georgia, this additional charge is not a tip and it should be noted that the establishment should inform the customer of this. If any portion of that service charge is shared with the service staff, then customers should be made aware of that as well.

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

In some states, 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, the employer may be allowed to deduct the employees share of the credit card processing charge the employee realizes. Georgia law does not specifically address the issue of credit card processing fees.

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

(Note: Most businesses track tips on paper and complex spreadsheets, which is labor intensive and prone to error, adding exposure to wage/tip lawsuits and IRS tip audits. Instead, TipMetric.com has developed a better solution. This innovative web app is purpose built to automate & make tips distribution safe & secure.)

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