Ohio Tipped Employee Wage Laws

Ohio Tipped Employee Wage Laws

Greg Mansell

Greg Mansell

March 24, 2021 11:35 AM

Are you employed in a position where you frequently receive tips as part of your pay? If so, make sure you are receiving the total wages you are entitled to and the your employer is paying you according to the federal and state wage laws. In this post, our Ohio wage lawyers explains how your tips earned effect your hourly rate of pay. See more for Ohio Tipped Employee Wage Laws.

Employees are considered tipped employees if they receive more than $30.00 per month in tips. Generally, tips are the property of the employee, and the employer may not take or use the employee’s tips for any reason other than (1) as a “tip credit” against the minimum wage owed to the employee; or (2) as a contribution towards a valid “tip pool.” Your Columbus, Ohio Wage and Hour Lawyers explain these two main exceptions below.

Tip Credit Laws

Under the Fair Labor Standards Act, a tipped employee’s minimum hourly wage is permitted to be substantially lower than the federal minimum wage of $7.25 per hour. In Ohio, tipped employees’ hourly wages can be as low as $4.40 per hour, and an employer may claim a “tip credit” to reduce the hourly wage it is required to pay its tipped employees. If an employee receives tips at work, the employer can claim a tip credit of up to $2.85 per hour (federal minimum wage of $7.25 – Ohio tipped minimum wage of $4.40).

Example: Sue works as a server at a restaurant. Sue’s employer pays her $5.00 per hour, and Sue routinely receives around $10.00 per hour in tips. Sue’s employer can claim a tip credit of up to $0.60 per hour ($5.00 wage – Ohio tipped minimum wage of $4.40) to offset the hourly wage it owes Sue since Sue is also earning money through tips.

Before using a tip credit system, however, the employer MUST inform all tipped employees of the following:

  1. The cash wage the tipped employee will be paid (at least $4.40 per hour in Ohio);
  2. The amount the employer is claiming as a tip credit (not to exceed $2.85 per hour in Ohio);
  3. That the tip credit claimed by the employer cannot exceed the total amount of tips the employee actually received;
  4. That all tips the employee receives are to be kept by the employee, unless a valid tip pool is used; and
  5. That the tip credit will not apply to any tipped employee unless the employee is informed of the above rules.

If the employer fails to inform its tipped employees of the above policies, it cannot use the tip credit system and it must pay its tipped employees at least minimum wage for each hour worked ($8.80 per hour in Ohio).

Additionally, if an employer uses the tip credit system, it must ensure the tipped employee’s hourly wage, combined with tips earned, equals at least the federal minimum wage of $7.25 per hour ($8.80 per hour in Ohio). If an Ohio employee’s hourly cash wage combined with tips does not equal at least $8.80 per hour, then the employer must make up the difference.

Tip Pools

Tip pooling is the process by which employees who frequently receive tips, like servers or bartenders, “pool” the total amount of tips received. Tip pooling is permitted under the FLSA and Ohio wage laws, and an employer may require its employees to pool their tips together and redistribute the funds based on a pre-established formula.

However, a valid tip pool may not include any employees who do not typically earn tips, such as cooks or janitors. While employers often utilize both a tip credit system and a tip pool system, an employer may only claim a tip credit on the amount the tipped employee ultimately receives after the tip pool distribution. An employer may not retain any part of the tip pool or otherwise take employees’ tips for any other use.

Example: Bob is a server, Dave is a bartender, and Bill is a server’s assistant at a restaurant. The restaurant uses a tip pool system with the following formula: server’s receive 50% of the total tips, bartenders receive 25% of the total tips, and server’s assistants receive 25% of the total tips. This is a permissible tip pooling system under the FLSA, since all employees involved work in positions that frequently receive tips.

Example: The same restaurant in the above example decides it will now keep 10% of the total tip pool. This is NOT permissible, as the restaurant is taking employees’ tips for a purpose other than claiming a tip credit against payment of the employees’ hourly wage.

If you believe the tipping policies at your place of employment are improper, or if you have other questions related to your wages or employment, please reach out to your Ohio wage lawyers for a free consultation. Our lawyers can answer any questions you have on Ohio tipped employee wage laws.

Mansell Law

Wage and Hour Attorneys representing clients in Ohio and New York.

Related Articles

Major Change to FLSA Procedure

by Greg Mansell

The Sixth Circuit will determine if a major procedural change is warranted for employees seeking unpaid wages.

Procedural Changes for Unpaid Employees

Wage and Overtime Laws for Truck Drivers

by Greg Mansell

For truck drivers nationwide, underpayment and overtime violations are just the beginning of a long list of problems. Below we explore the wages you are entitled to but may not be receiving.

Truck Driver Wage and Overtime Laws in the US

The Impact of Duran on the Certification Process in Wage and Hour Class Actions

by Tim Freudenberger and Nancy Lubrano

In May 2014, class action defense attorney Tim Freudenberger from Carothers DiSante & Freudenberger LLP, obtained a very favorable decision from the California Supreme Court in Duran v. U.S. Bank Nat. Assn., 59 Cal. 4th 1 (2014).

Wage and Hour Class Actions

Trending Articles

The Best Lawyers in Spain™ 2023

by Best Lawyers

Announcing Spain's recognized lawyers for 2023.

Flag of Spain

Announcing the 2023 The Best Lawyers in America Honorees

by Best Lawyers

Only the top 5.3% of all practicing lawyers in the U.S. were selected by their peers for inclusion in the 29th edition of The Best Lawyers in America®.

Gold strings and dots connecting to form US map

The Best Lawyers in Chile™ 2023

by Best Lawyers

The results include an elite field of top lawyers and firms in Chile.

White star in blue box beside white box with red box on bottom

Thirteen Years of Excellence

by Best Lawyers

For the 13th consecutive year, “Best Law Firms” has awarded the most elite and talented law firms across the country through a thorough and trusted data review process.

Red, white and blue pipes and writing on black background

The Best Lawyers in South Africa™ 2023

by Best Lawyers

Best Lawyers proudly announces lawyers recognized in South Africa for 2023.

South African flag

The 2023 Best Lawyers in Portugal™

by Best Lawyers

Announcing the elite group of lawyers recognized in Portugal for 2023.

Green and red Portuguese flag

Announcing The Best Lawyers in Peru™ 2023

by Best Lawyers

Honoring our awarded lawyers for 2023 in Peru.

Red and white stripes with green leaf symbol

The Best Lawyers in Spain™ 2022

by Best Lawyers

The results include an elite field of top lawyers and firms.

The Best Lawyers in Spain™ 2022

Best Lawyers: Ones to Watch in America for 2023

by Best Lawyers

The third edition of Best Lawyers: Ones to Watch in America™ highlights the legal talent of lawyers who have been in practice less than 10 years.

Three arrows made of lines and dots on blue background

Famous Songs Unprotected by Copyright Could Mean Royalties for Some

by Michael B. Fein

A guide to navigating copyright claims on famous songs.

Can I Sing "Happy Birthday" in Public?


Rewriting 𝙃𝙀𝙍𝙨𝙩𝙤𝙧𝙮 One Verdict at a Time

by Justin Smulison

Athea Trial Lawyers was formed only a year ago by several prestigious lawyers seeking justice for their clients, and together they are making history.

Six female lawyers sitting in office

Announcing the 2022 Best Lawyers® in the United States

by Best Lawyers

The results include an elite field of top lawyers listed in the 28th Edition of The Best Lawyers in America® and in the 2nd Edition of Best Lawyers: Ones to Watch in America for 2022.

2022 Best Lawyers Listings for United States

Announcing the 2023 The Best Lawyers in Canada Honorees

by Best Lawyers

The Best Lawyers in Canada™ is entering its 17th edition for 2023. We highlight the elite lawyers awarded this year.

Red map of Canada with white lines and dots

What the Courts Say About Recording in the Classroom

by Christina Henagen Peer and Peter Zawadski

Students and parents are increasingly asking to use audio devices to record what's being said in the classroom. But is it legal? A recent ruling offer gives the answer to a question confusing parents and administrators alike.

Is It Legal for Students to Record Teachers?

Strength in Numbers: When Partnering Up May Be Best in Whistleblower Litigation

by Justin Smulison

Whistleblower claims make headlines when they result in multimillion-dollar settlements. But the journey to the courtroom is characterized by complexity and requires time and resources. Bienert Katzman Littrell Williams partner and The Best Lawyers in America awardee Michael R. Williams discusses when and why partnerships between counsel will strengthen whistleblower litigation.

A Blue Person in the Middle of White People

Announcing the 2022 "Best Law Firms" Rankings

by Best Lawyers

The 2022 “Best Law Firms” publication includes all “Law Firm of the Year” recipients, national and metro Tier 1 ranked firms and editorial from thought leaders in the legal industry.

The 2022 Best Law Firms Awards