Arkansas Tip Laws and Requirements
Arkansas tip laws, updated in 2021, differ from federal FLSA regulations by allowing a higher tip credit due to the state's higher minimum wage, permitting tipped employees to be paid $2.63 per hour with a tip credit up to $8.37 per hour, while adhering to federal rules that employers can only apply tip credits for hours worked in tipped occupations and that tips must be pooled among eligible employees.
Under the Fair Labor Standards Act (FLSA), tips are regulated. Employers who meet certain criteria are permitted to take a partial credit against minimum wage obligations for tipped employees. Tipped employees include those engaged in jobs in which they regularly and customarily receive tips.
The tip credit was created by Congress in 1966, and adjustments occurred on December 28, 2021, when the 2021 Dual Jobs Final Rule went into effect. A federal court vacated portions of the final rule in October 2024, which effectively reinstated the original dual jobs regulation (29 C.F.R.531.56(e)). It recognizes that an employee may work in tipped and non-tipped occupations, and employers are only permitted to take the tip credit against minimum wage obligations for hours worked in the tipped occupation.
The FLSA mandates that a tipped worker must be paid at least $2.13 per hour. The FLSA tip credit can be equal to the difference between the direct (or cash) wage paid to the employee and the federal minimum wage. Only tips actually received by an employee count when making the determination of a tipped employee and applying the credit.
The FLSA also permits employees to “pool” or share tips with other eligible employees, although it doesn’t impose a limit on the amount or percentage of the contribution of each employee in a valid tip pool.
State law may differ from the federal FLSA standards. Review what tip laws apply in Arkansas.
When Were the Tip Laws Last Updated in Arkansas?
Tip laws in Arkansas were updated in 2021.
Does Arkansas Have Tip Laws That Differ from Federal Tip Laws?
Yes, Arkansas has laws in place that differ from the regulations under the FLSA. Since the state minimum wage is higher than the federal minimum wage, the tip credit amount is higher than what is permitted under the FLSA. Currently, tipped employees may be paid $2.63 per hour with a tip credit of up to $8.37 per hour.
Who Holds the Ownership of Tips in Arkansas?
Under state law, any gratuities paid to employees are their property. Employers are not permitted to keep tips.
What are the Rules for Distribution of Credit Card Processing Tips in Arkansas?
A tip given to an employee must be paid out in the next payroll.
What are the Tip Pooling Rules in Arkansas?
Employers in Arkansas are allowed to establish tip pools, although employees must consent to participate. Employers are required to notify participants in advance and redistribute all tips within the same pay period.
Who Can and Can’t Participate in Tip Pools in Arkansas?
Waitstaff, service employees, and service bartenders are allowed to participate in tip pools. Owners, supervisors, and managers are specifically restricted.
Is there a Difference Between Tips and Service Charges in Arkansas?
Yes, a mandatory service charge is not considered a tip. Therefore, it would belong to the employer.
To be considered a tip instead of a service charge, a customer must give money voluntarily in an amount of their own choosing. The customer must also be able to determine who receives it, and it can’t be set by employer policy.
Can Employers Deduct Credit Card Fees from Tips in Arkansas?
Although some states prohibit the deduction of credit card fees from tips, Arkansas does not have a specific law in place. Employers may make this deduction, although they must make up the difference for any employee whose hourly wage doesn’t reach the state minimum.
Do Tips Count Toward the Minimum Wage in Arkansas?
Yes, the tip credit can count toward minimum wage.
Do Tips Factor Into Regular Rate Calculations for Overtime Pay in Arkansas?
Any eligible employee working over 40 hours in a week should receive overtime pay (1.5 times their normal hourly wage). The tip credit can still apply to these hours.
Are There Cities and Municipalities in Arkansas That Have Their Own Tip and Service Charge Rules That Differ from Statewide Laws?
No, there are currently no cities or municipalities with differing tip or service charge rules.
What Are the Record-Keeping Requirements for Employers Regarding Tips in Arkansas?
Employers must keep detailed records of all tips reported by employees, including amounts and dates of service. If tip pooling is in effect, the record should also include the arrangements and the distribution of tips to eligible staff members.
What Options Do Employees Have for Remuneration if Their Tips are Withheld in Arkansas?
An employee may take legal action against an employer who violates state tip laws.
What are the Penalties for Employers for Not Complying with Arkansas Tip Laws?
Violating Arkansas tip laws can subject an employer to a monetary fine per occurrence, as well as legal charges brought by the employee.
Managing the regulations associated with tips in Arkansas can be a challenge. The numerical clock prompt feature allows the employee to input their received tips at the end of the shift, and that information would be available for reporting and payroll processing.
Arkansas Department of Labor and Licensing: Min. Wage and OT
Related
Pennsylvania Tip Laws and Requirements
Pennsylvania's tip laws, updated in August 2022, align with federal Fair Labor Standards Act regulations by allowing employers to take a tip credit against minimum wage for tipped employees who earn at least $135 per month in tips, requiring a base hourly wage of at least $2.83, while recognizing that tips are the property of employees and that tip pooling is permitted without federal limits on contribution amounts.
South Carolina Tip Laws and Requirements
South Carolina adheres to federal Fair Labor Standards Act (FLSA) tip laws, which regulate tipped employees' wages, allow employers to take a tip credit against minimum wage only for hours worked in tipped occupations, mandate a minimum cash wage of $2.13 per hour for tipped workers, permit tip pooling among eligible employees without limits on contributions, and recognize that tips are the property of employees, with the state's tip laws last updated in September 2021 and no deviations from federal standards.
Montana Tip Laws and Requirements
Montana's tip laws, updated in 2021, differ from federal FLSA regulations by prohibiting employers from using a tip credit and requiring payment of the full state minimum wage—which is higher than the federal rate—to tipped employees, who retain ownership of their gratuities.
Colorado Tip Laws and Requirements
Colorado tip laws, last updated in December 2023, differ from federal Fair Labor Standards Act (FLSA) regulations by enforcing a higher state minimum wage, specific rules on tip ownership—where tips belong solely to employees and cannot be claimed by employers—and distinct provisions regarding tip pooling and support staff eligibility, while federal law permits employers to take a tip credit against minimum wage only for hours worked in tipped occupations and mandates a minimum cash wage of $2.13 per hour for tipped employees.
New Mexico Tip Laws and Requirements
New Mexico's tip laws, updated in 2023 to reflect a higher statewide minimum wage, allow employers to take a tip credit differing from the federal standard under the FLSA—which mandates a $2.13 hourly wage for tipped employees and permits tip pooling—but require adherence to state-specific rates and regulations regarding tip ownership and credit application, especially considering the reinstated original dual jobs rule limiting tip credit to hours worked in tipped occupations.
Missouri Tip Laws and Requirements
Missouri's tip laws, updated in September 2021, differ from federal FLSA regulations by allowing employers to count tips as part of wages but limiting the tip credit to no more than 50% of the state's higher minimum hourly wage, while also adhering to federal rules that require tipped employees to be paid at least $2.13 per hour and permit tip pooling among eligible employees.