Ohio Minimum Wage Laws for Tipped Employees

As Columbus, Ohio, and Toledo, Ohio, unpaid overtime and minimum fair wage attorneys, it’s important to inform tipped employees of their rights under federal and Ohio law.

Oftentimes employers in the hospitality and service industries try to increase profits at the expense of their employees who depend on tips as a large part of their compensation.

This type of wage theft is more common than you may expect.

A 2022 study found that minimum wage violations affect an estimated 213,000 Ohio employees each year, with 51% of these employees being in the service and hospitality industry—and therefore more likely to be tipped employees (1).

In these industries, employers fail to meet minimum wage rate requirements, handle the tip credit properly, and don’t help tipped workers understand their pay.

Failure to adhere to the FLSA and Ohio state minimum wage requirements results in unpaid overtime and minimum wage violations.

If you believe you are owed unpaid overtime or minimum wages as a result of your employer’s conduct, contact a Columbus or Toledo, Ohio, attorney at Bryant Legal, LLC for a free consultation.

Who is Considered a Tipped Employee?

A tipped employee is “any employee engaged in an occupation in which they customarily and regularly receive more than $30 a month in tips.”

Tipped employees largely work in the restaurant, hospitality, and service industries and regularly receive tips based on the performance of their jobs.

Examples of tipped employees in Ohio may include:

Waiters and waitresses (wait staff)
Bartenders
Dancers in strip clubs

This is a non-exhaustive list as there are other occupations that receive tips as part of their jobs. To determine if the tipped minimum wage applies to you, contact the lawyers at Bryant Legal, LLC.

What is the Minimum Wage for Ohio Tipped Employees in 2023?

The federal law known as the Fair Labor Standards Act of 1938 (FLSA) requires employers to pay employees at least the federal minimum wage rate, currently $7.25 per hour. But under FLSA, the base wage for tipped employees is $2.13 per hour (2).

As of January 1, 2023, Ohio’s minimum wage is $10.10 per hour for non-tipped employees. Under Ohio law for tipped employees, the minimum wage is one-half of the state’s minimum wage, or $5.05 per hour plus tips (3).

What is Tip Credit?

One exception is the “tip credit.”

Both the FLSA and the Ohio Act permit employers to pay tipped employees less than the statutory minimum wage if the tips the employee receives, when combined with the hourly wages paid by the employer, equals or exceeds the minimum wage. (See 29 U.S.C. § 203(t).)

If the base wage and the employee’s tips do not equal the statutory minimum wage, the employer is required to make up the difference.

There are several conditions for the tip credit. For an employer to claim a tip credit, its tipped employees must:

Regularly receive at least $30 per month in tips;
Be paid an hourly wage of at least $2.13 per hour;
Retain all tips earned; and
Be given actual notice, in advance, of the employer’s use of the tip credit provisions of the FLSA. (29 C.F.R. § 531.59)

The notice must include:

The amount of cash wage the employer is paying a tipped employee, which must be at least $2.13 per hour;
The additional amount claimed by the employer as a tip credit, which cannot exceed $5.12 (the difference between the required tipped minimum wage of $2.13 and the current federal minimum wage of $7.25);
That the tip credit claimed by the employer cannot exceed the amount of tips actually received by the tipped employee;
That all tips received by the tipped employee are to be retained by the employee, except for a valid tip pooling arrangement; and
That the tip credit will not apply to any tipped employee unless the employee has been informed of these tip credit provisions.

When are Common Tip Credit Violations?

Failure to Provide Employees Notice of Tip Credit

An employer must inform its employees that it intends to treat tips to satisfy its part of the minimum wage obligation. At minimum, an employer must provide notice to employees of its intent to use the tip credit.

If the employer fails to do so, tip credit may not be claimed regardless of whether employees suffered actual economic harm as a result. (See 29 U.S.C. § 203(m), 206.)

Relying on Pay Stubs or Tip Reporting Practices to Communicate the Tip Credit Notice

An employer cannot rely on what employees might infer from pay stubs showing sub-minimum wages or its tip reporting practices to confer the notice.

Tip Sharing with Non-Tipped Employees

In addition to not fulfilling the tip credit notice requirements above, employers can lose the ability to apply the tip credit for a variety of reasons, including managers and owners taking part in the tips or forcing the employees to share tips with traditionally non-tipped employees.

Employers Must Pay Tipped Employees Overtime

If you are a tipped employee and work over 40 hours per week, you are entitled to overtime pay at a rate of at least 1.5 times their standard hourly rate.

Thus, tipped workers getting $2.13 per hour for regular time should be paid 1.5 times the minimum wage for each hour worked over 40 hours in a given workweek, or $10.88.

Ohio Employees Working for Tips: Contact the Columbus and Toledo, Ohio Lawyers at Bryant Legal, LLC

If you are a tipped employee and have reason to believe:

Your wages are incorrect
You have not been paid overtime
Your tips are not properly being accounted for; or
You were not properly informed of a tip credit notice

Contact an Ohio FLSA attorney at Bryant Legal, LLC for a free case consultation.

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