Asked in Employment Law for Arkansas

Q: Is it legal for employer to take tips as a punishment for minimum wage employee?

We keep tips and divide out every other week between pay periods and employer is taking tips because of item deletions and using them to buy espresso shots for company contest.

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2 Lawyer Answers
Rhiannon Herbert
Rhiannon Herbert
Answered

A: Under the Fair Labor Standards Act, employers are permitted to use a tip pooling system, where tipped employees "pool" the total amount of tips received. Employers may require employees to pool their tips together and redistribute the funds according to a pre-established formula, but the employer is not permitted to participate in the pool by retaining any portion of tipped employees' tips or otherwise take employees' tips for any other use.

Greg Mansell
Greg Mansell
Answered

A: Tips are always the property of the employee. The only deduction an employer can make is for the ACTUAL cost of a credit card transaction. As stated by Rhiannon below, even under a lawful tip pooling arrangement, the employer cannot retain tips for the reasons you have provided. Contact a wage and hour attorney to see what your options are.

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