Employers have legal obligations to employees and one is to pay employees properly. Many New Jersey employees receive tips as part of their compensation to include waiters, bartenders, doormen, porters, maids, movers and newspaper delivery people. In fact, some employees earn more in tips than in wages paid by their employers.
The basic rule of tips is that they belong to the employee, not the employer. Employers generally can not take employees’ tips. However, an employer can take a tip credit which allows them to count some of an employee’s tips towards minimum wage obligations. Minimum wage laws protect all employees, whether or not they receive tips. Employees are entitled to earn a minimum hourly wage. The minimum wage in New Jersey is $8.38 an hour.
New Jersey requires that an employee’s combined wage and tips must add up to at least the minimum wage. Although the state’s Department of Labor and Workforce Development “suggests” a minimum wage of $2.13 for tipped employees, it also says the wage rate for tipped employees may be set by the employer.
If tipping is voluntary, whatever amount the customer leaves over and above the charge for products or services plus tax is a tip. However, if the employer imposes a mandatory service charge, or the customer pays by credit card, the rules might be different.
Mandatory Service Charges
Some restaurants add a mandatory service charge on to bills for large tables of diners, private parties, or catered events. The service charge is not considered a tip. Even if the customer thinks that the money is going to the service provider and doesn’t leave additional money, the employer can keep a “service charge.” Many employers give at least part of these service charges to employees, but there is no legal obligation to do so.
If you have questions about employee compensation, consult with an experienced employment law attorney.
The experienced attorneys at Mattleman, Weinroth & Miller, P.C., are well versed in handling a variety of cases within the state of New Jersey. Contact our firm for your free initial consultation and have any questions answered.