Tipped Employees

Many workers in Atlanta and throughout Georgia rely on tips for a significant portion of their income. The Fair Labor Standards Act (FLSA) allows employers to pay tipped employees a reduced wage of $2.13 per hour, so long as tips make up the difference to the federal minimum wage of $7.25/hour.

This practice is called the “tip credit.” However, strict rules apply, and when employers misuse or abuse the tip credit, workers often lose out on wages they are legally owed.

If you work in a restaurant, bar, hotel, salon, or other service industry in Georgia, understanding your rights as a tipped employee is critical.

Tip pooling occurs when tipped employees are required to combine their tips, which are then redistributed among a group of eligible employees. Under the FLSA, employers may mandate a valid tip pool, but strict rules apply:

• Only employees who customarily and regularly receive tips (servers, bartenders, bussers, service bartenders, counter staff) may participate.
• Managers and supervisors may never take part in a tip pool.
• The employer must give proper notice to employees if a mandatory tip pool is in place.
• Employers cannot take any portion of the pool for themselves or use pooled tips to pay non-tipped employees.

When employers include ineligible workers in a tip pool or fail to make up the minimum wage difference, tipped employees can bring wage claims under the FLSA.

Tip sharing differs from tip pooling in that employees voluntarily share a portion of their tips with co-workers. For example, a server might tip out a busser or bartender. This is generally legal as long as:

• The decision to share is truly voluntary and not coerced by the employer.
• The sharing arrangement does not reduce the employee’s total pay below the federal minimum wage.
• Supervisors and managers do not receive any share of tips.

Problems arise when employers disguise a mandatory tip pool as “tip sharing,” pressuring employees to hand over part of their tips. If this happens in your workplace, it may amount to an illegal wage practice under the FLSA.

Employers often make mistakes - or knowingly cut corners - when dealing with tipped employees and applying the tip credit. Common violations include:

• Failing to make up the difference when tips do not bring total hourly wages to $7.25.
• Illegal tip pooling - requiring tipped employees to share tips with managers, supervisors, or back-of-house staff not eligible to participate.
• Dual jobs rule violations - paying the tipped wage for non-tipped work (e.g., cleaning, stocking, or prep work) when it exceeds 20% of the shift.
• Misclassification - labeling employees as “independent contractors” to avoid minimum wage obligations.
• Improper deductions - deducting for uniforms, walkouts, or breakages that drop pay below minimum wage.

Each of these practices can form the basis of a wage claim under the FLSA.

If you are a tipped worker in Atlanta or elsewhere in Georgia, you have the right to:

• Earn at least $7.25/hour between wages and tips.
• Keep your tips (subject to legal tip pooling rules).
• Be paid the full minimum wage if your employer fails to follow the tip credit rules.
• Recover unpaid wages and liquidated (double) damages if your employer violates the law.
• Be free from retaliation for asserting your wage rights.

When employers fail to comply with the FLSA’s tipped employee rules, employees may recover:

• Back pay for unpaid wages
• Liquidated damages equal to the unpaid wages (effectively doubling recovery)
• Attorney’s fees and court costs
• Up to 3 years of back pay if the violation was willful

The restaurant and hospitality industries are among the largest employers in Atlanta. From Midtown and Buckhead restaurants to hotels near Hartsfield-Jackson, thousands of Georgians rely on tips. Unfortunately, wage theft in the service industry is common, often hidden behind complex tip policies.

The top Atlanta wage and hour lawyers at Fidlon Legal help tipped employees recover unpaid wages and ensure that Georgia employers comply with the law.

Employers can pay $2.13/hour in wages, but only if tips bring total pay to at least $7.25/hour.

Employers cannot keep your tips, though they may require valid tip pooling among eligible employees (e.g., servers, bartenders, bussers). Managers and supervisors cannot share in the pool.

If non-tipped work exceeds 20% of your shift, your employer must pay you the full minimum wage of $7.25/hour for that time.

Generally up to 2 years, or 3 years for willful violations under the FLSA.

Not if it reduces your pay below minimum wage. Such deductions often violate the FLSA.

If you believe your employer has misused the tip credit, failed to pay minimum wage, or required unlawful tip pooling, you may be owed significant back wages.

Contact the leading Atlanta, Georgia tipped employee lawyers at Fidlon Legal law today for a confidential free case evaluation. We’ll review your employer’s pay practices, explain your rights, and fight to recover every dollar you’ve earned.