New Jersey Tip Laws and Requirements
New Jersey's tip laws, updated in August 2021, differ from federal Fair Labor Standards Act (FLSA) regulations by requiring employers to follow the state's higher minimum wage when applying tip credits, recognizing tipped employees as those regularly receiving tips, allowing tip pooling among eligible employees without federal limits, and adhering to the reinstated original dual jobs rule that limits tip credit application to hours worked in tipped occupations.
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 New Jersey.
When Were the Tip Laws Last Updated in New Jersey?
The tip laws were updated in New Jersey in August of 2021. The changes came with the state Division of Wage & Hour Compliance released 52 N.J.R. 1562(a).
Does New Jersey Have Tip Laws That Differ from Federal Tip Laws?
Yes, New Jersey has tip laws that differ from federal laws. Employers are permitted to take the tip credit, but the amount is different due to the higher statewide minimum wage. Employers must adhere to the current rate.
Who Holds the Ownership of Tips in New Jersey?
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 New Jersey?
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 New Jersey?
Employers are permitted to establish mandatory tip pools, but they must notify employees about participating and the required contribution amount in advance. They also may not keep tips or distribute them to non-tipped workers.
Who Can and Can’t Participate in Tip Pools in New Jersey?
Tipped employees may participate. Supervisors, managers, owners, and non-tipped employees may not.
Is there a Difference Between Tips and Service Charges in New Jersey?
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 New Jersey?
No, employers must cover any credit card fees and pay the employee the full tip amount.
Do Tips Count Toward the Minimum Wage in New Jersey?
Yes, tips may count toward the minimum wage in New Jersey as long as the employer adheres to the required tip credit vs. cash wage amount.
Do Tips Factor Into Regular Rate Calculations for Overtime Pay in New Jersey?
Yes, tips 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), and employers may take a tip credit as long as it is calculated on the full minimum hourly wage.
Are There Cities and Municipalities in New Jersey That Have Their Own Tip and Service Charge Rules That Differ from Statewide Laws?
No, there are no cities or municipalities with differing laws.
What Are the Record-Keeping Requirements for Employers Regarding Tips in New Jersey?
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 New Jersey?
An employee may take legal action against an employer who violates state tip laws.
What are the Penalties for Employers for Not Complying with New Jersey Tip Laws?
Violating New Jersey tip laws can subject an employer to a fine ranging from $500 to $5,000 per violation. Employees may also be permitted to recover the unpaid wages in damages.
Related
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.
Wyoming Tip Laws and Requirements
Wyoming adheres to federal Fair Labor Standards Act (FLSA) tip laws last updated in 2013, which allow employers to take a tip credit against minimum wage only for hours worked in tipped occupations, require tipped employees to be paid at least $2.13 per hour plus tips, recognize that tips belong to employees and cannot be confiscated by employers, and permit tip pooling among eligible employees without federal limits on contribution amounts.
North Dakota Tip Laws and Requirements
North Dakota's tip laws, last updated in September 2021, align with federal standards under the Fair Labor Standards Act by allowing employers to take a tip credit against minimum wage obligations for tipped employees—who must be paid at least $2.13 per hour—with the state permitting a tip credit of up to 33% of the minimum wage and recognizing that tips are the property of employees, while also adhering to federal rules on tip pooling and the dual jobs regulation reinstated in 2024.
New Hampshire Tip Laws and Requirements
New Hampshire's tip laws, updated in September 2023, differ from federal FLSA regulations by requiring employers to pay tipped employees a base wage of at least 45% of the minimum wage plus at least $30 per week in tips, while federal law allows employers to take a tip credit against minimum wage obligations only for hours worked in tipped occupations and mandates a minimum cash wage of $2.13 per hour.
Nebraska Tip Laws and Requirements
Nebraska's tip laws, updated in January 2024, require employers to comply with both federal FLSA regulations—such as paying tipped employees at least $2.13 per hour and applying tip credits only for hours worked in tipped occupations—and state-specific rules including a higher statewide minimum wage and full hourly pay for non-tipped duties, thereby mandating that tipped employees earn enough tips plus wages to meet Nebraska's elevated wage standards.
Connecticut Tip Laws and Requirements
Connecticut's tip laws, updated in September 2020, require employers to comply with the state's higher minimum wage rather than the federal rate, allowing a variable tip credit for tipped employees such as hotel and restaurant waitstaff, while federal regulations under the FLSA set a $2.13 minimum cash wage and permit tip pooling but only allow tip credits for hours worked in tipped occupations, with recent federal rule changes and court decisions affecting these provisions.