Nevada Tip pooling and Tip credit Laws | TipMetric 2020
For the state of Nevada, service industry employees who earn tips can find more information about Nevada minimum wage, tip rules and standards for overtime pay at the website for the Nevada Office of the Labor Commissioner.
The Fundamentals About Tips
To begin, federal law and state of Nevada 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.
· In some states, 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. In Nevada, employers are not allowed to take a tip credit and must ensure they pay the full minimum wage to all employees.
· 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 (or state minimum — whichever is higher), employees are owed a minimum wage per hour. At the federal level, that amount is $7.25. In the state of Nevada, that minimum is $8.25 per hour. Since employers in Nevada are not allowed to take a tip credit, they must pay employees, including tipped employees, the mandated state minimum wage per hour.
Pooling Tips
Nevada 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.
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 Nevada, 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
If an employer pays a processing fee to accept credit cards from customers (such as 3%), and that customer leaves a tip as part of the credit card payment, then in Nevada, the employer may be allowed to deduct the employees share of the credit card processing charge the employee realizes. Nevada law does not specifically address this issue regarding credit card processing fees as it relates to staff tips.
Persons employed within the hospitality industry in Nevada should have an understanding of the state’s rules and rites as well as an understanding of how their income may be impacted.
(Note: If you are using Excel (or Pen & Paper) for Restaurant Tips Distribution, visit TipMetric.com to learn how to Eliminate Excel Mistakes, Reduce Tips Disputes & Liabilities and Save Time Processing Payroll.)