Minnesota Tip Laws and Requirements
Minnesota's tip laws, updated in August 2024, differ from federal FLSA regulations by prohibiting employers from taking a tip credit—requiring tipped employees to receive the full state minimum wage plus tips—and affirm that tips are the sole property of employees, with employers unable to claim or require sharing beyond valid tip pooling among eligible staff.
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 Minnesota.
When Were the Tip Laws Last Updated in Minnesota?
The tip laws were updated in Minnesota in August of 2024.
Does Minnesota Have Tip Laws That Differ from Federal Tip Laws?
Yes, Minnesota has tip laws that differ from federal laws. Employers are not permitted to take a tip credit; employees must receive the full hourly minimum rate in addition to any tips received.
Who Holds the Ownership of Tips in Minnesota?
Under federal law, any gratuities paid to employees are their property. Employers are not permitted to require employees to hand in their tips, although they are allowed to count the tip toward the hourly rate.
What are the Rules for Distribution of Credit Card Processing Tips in Minnesota?
Federal law states that all tips paid by credit card must be issued to employees no later than the next regular payday, even if the employer is awaiting reimbursement from the financial provider.
What are the Tip Pooling Rules in Minnesota?
Employers are also not allowed to require employees to participate in a tip pool. Dividing money left in a “tip jar” (or its equivalent) is allowed under the law, but the funds must be split between direct service employees during a single shift.
Who Can and Can’t Participate in Tip Pools in Minnesota?
Since mandatory tip pools are not permitted in Minnesota, there are no participation rules.
Is there a Difference Between Tips and Service Charges in Minnesota?
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 Minnesota?
No. A law went into effect in August 2024 requiring that any tip charged on a credit card be treated the same as one given in cash. No deductions can be made.
Do Tips Count Toward the Minimum Wage in Minnesota?
No. Tipped employees are required to be paid minimum wage in addition to any tips.
Do Tips Factor Into Regular Rate Calculations for Overtime Pay in Minnesota?
No, tips don’t factor into rate calculations for overtime pay. Any eligible employee working over 40 hours in a week should receive overtime pay (1.5 times their normal hourly wage).
Are There Cities and Municipalities in Minnesota That Have Their Own Tip and Service Charge Rules That Differ from Statewide Laws?
No, Minnesota law does not allow cities or municipalities to create or enforce laws that differ from the statewide tip and service charge rules.
What Are the Record-Keeping Requirements for Employers Regarding Tips in Minnesota?
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 Minnesota?
An employee may take legal action against an employer who violates state tip laws.
What are the Penalties for Employers for Not Complying with Minnesota Tip Laws?
Violating Minnesota tip laws can subject an employer to a penalty of up to $11,524 (50+ employees) or a similar amount (under 50 employees). Employees may also be permitted to recover the unpaid wages in damages.
Managing the regulations associated with tips in Minnesota 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.
Related
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.
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.
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.
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.
Wisconsin Tip Laws and Requirements
Wisconsin's tip laws, last updated in 2021, generally align with federal Fair Labor Standards Act regulations—requiring tipped employees to be paid at least $2.33 per hour (slightly above the federal $2.13), allowing employers to take a tip credit only for hours worked in tipped occupations, recognizing that tips are the property of employees and prohibiting employers from requiring employees to surrender their tips, while also permitting tip pooling among eligible employees without federal limits on contribution amounts.
Kansas Tip Laws and Requirements
Kansas tip laws generally follow federal Fair Labor Standards Act (FLSA) regulations, including the allowance of a tip credit against minimum wage for tipped employees, the requirement to pay tipped workers at least $2.13 per hour, the recognition of dual jobs for tip credit application, the permissibility of tip pooling, and the obligation for employers to inform employees about tip credits and cash wages, with Kansas-specific provisions such as exempting cash gratuities from sales tax and aligning its 2021 updates with federal changes.