Can Employers in Minnesota Take a Tip Credit for the Minimum Wage?

No – while federal law and certain other state laws permit employers to take a tip credit for purposes of satisfying minimum wage requirements, Minnesota does not.

Under the federal Fair Labor Standards Act (FLSA), for example, tipped employee must be paid a minimum wage of at least $2.13 per hour, and the employer can take a tip credit of up to $5.12 per hour to satisfy the requirement of paying the employee a minimum wage of at least $7.25 per hour.  See 29 U.S.C. § 203(m); 29 U.S.C. § 206(a)(1).

In contrast, Minnesota law provides that “[n]o employer may directly or indirectly credit, apply, or utilize gratuities towards payment of the minimum wage set by this section or federal law.”  Minn. Stat. § 177.24, Subd. 2.

Takeaway:  Although tip credits are permitted under federal law and in certain other states, tip credits are prohibited in Minnesota.

About Michael Miller

Michael is a Chambers-rated attorney in Briggs and Morgan's Employment, Benefits, and Labor group and is head of the firm’s Employment Law Counseling and Compliance practice group. He has 25 years experience counseling employers to prevent unwanted litigation and advises companies of ongoing changes in federal, state and local employment law. Michael advises employers in all areas of employment law including discipline and discharge, leaves of absence, wage and hour compliance, non-compete and confidentiality agreements, affirmative action plans, background checking, and drug/alcohol testing. For Michael's full bio, click here.

Posted on October 29, 2013, in Wage and Hour and tagged . Bookmark the permalink. Leave a comment.

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