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.
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 Pennsylvania.
When Were the Tip Laws Last Updated in Pennsylvania?
The tip laws were updated in Pennsylvania in August of 2022.
Does Pennsylvania Have Tip Laws That Differ from Federal Tip Laws?
Yes, Pennsylvania has tip laws that differ slightly from federal laws. Employers are permitted to take a tip credit on employees who earn at least $135 per month in tips. The base hourly wage must be at least $2.83.
Who Holds the Ownership of Tips in Pennsylvania?
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 Pennsylvania?
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 Pennsylvania?
Tip pools are allowed, but employers must provide advanced notice of the pool.
Who Can and Can’t Participate in Tip Pools in Pennsylvania?
Only tipped employees may participate. Supervisors, managers, owners, and non-tipped employees may not.
Is there a Difference Between Tips and Service Charges in Pennsylvania?
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 Pennsylvania?
Yes, Pennsylvania law prohibits the deduction of credit card fees from employee tips. The state is one of a handful with such a law in place that ensures that all tips go to the employees.
Do Tips Count Toward the Minimum Wage in Pennsylvania?
Yes, tips may count toward the minimum wage in Pennsylvania as long as the employer adheres to the required tip credit vs. cash wage amounts.
Do Tips Factor Into Regular Rate Calculations for Overtime Pay in Pennsylvania?
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 Pennsylvania 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 Pennsylvania?
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 Pennsylvania?
An employee may take legal action against an employer who violates state tip laws.
What are the Penalties for Employers for Not Complying with Pennsylvania Tip Laws?
Violating Pennsylvania tip laws can subject an employer to a fine of up to $200 per day of non-compliance, as well as the requirement to make up the difference between the employee’s pay amount and the federal minimum wage. Employees may also take legal action to recover additional damages for unfair practices.
Managing the regulations associated with tips in Pennsylvania 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
Washington, DC Tip Laws and Requirements
Washington, DC's tip laws, updated most recently by the 2022 Initiative 82, differ from federal FLSA regulations by phasing out the tipped minimum wage over 4.5 years, starting with a $10 base wage for tipped workers as of July 1, 2024, 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 plus actual tips received.
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.
Rhode Island Tip Laws and Requirements
Rhode Island's tip laws, updated in June 2022, generally follow federal Fair Labor Standards Act regulations—including the allowance of tip credits and tip pooling—but differ by applying a higher state minimum wage and new tip protections for employees earning over $30 monthly in tips, while federal rules permit employers to take tip credits only for hours worked in tipped occupations and require tipped employees to be paid at least $2.13 per hour.
Arizona Tip Laws and Requirements
Arizona's tip laws, last updated in 2016, differ from federal FLSA regulations by allowing a higher state minimum wage and permitting employers to apply up to $3 per hour in tip credit, while a 2024 proposed amendment to limit tip credit to 25% of the minimum wage was rejected by voters.
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.
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.