The Consolidated Appropriations Act of 2018 (CAA) amended the Fair Labor Standards Act (FLSA) to make this rule explicit: employers are prohibited from keeping tips received by their employees, and managers and supervisors cannot take any portion of employee tips. However, there are situations where the lines get blurry, including tip pooling arrangements, tip credits, and service charges that look like tips but are not.
At BT Law Group, Miami employment attorneys Jason D. Berkowitz and Anisley Tarragona help tipped workers who have had their wages or tips improperly withheld. Our wage and hour lawyers understand the federal and state laws that protect your earnings and can help you take action when an employer crosses the line.
This guide explains who qualifies as a tipped employee, what employers can and cannot do with your tips, how tip pooling works, and what to do if your tips are being taken illegally. If your employer is taking your tips or violating wage laws, you may have a claim. Call BT Law Group, PLLC at (305) 507-8506 to discuss your situation.
Who is Considered a Tipped Employee Under Florida Law?
Under the FLSA, a tipped employee is any worker engaged in an occupation where they customarily and regularly receive more than $30 per month in tips. Florida does not have a separate definition, so the federal standard applies. Common tipped positions include servers, bartenders, valets, bellhops, hotel housekeepers, and delivery drivers.
The distinction matters because employers with tipped workers are allowed to take a “tip credit,” which reduces the base hourly wage they must pay. From September 30, 2025, through September 29, 2026, Florida’s minimum wage is $14.00 per hour, and the minimum cash wage for tipped employees is $10.98 per hour. On September 30, 2026, Florida’s minimum wage is scheduled to rise to $15.00 per hour, and the tipped cash wage to $11.98 per hour.
If your tips plus your cash wage do not add up to at least the full minimum wage for every hour you work, your employer must make up the difference. Failure to do so is a violation of law.
Key Takeaway: A tipped employee is anyone who regularly earns more than $30 per month in tips. Employers must (currently) pay tipped workers at least $10.98 per hour in direct wages, and tips must bring total pay to at least $14.00 per hour. The employer must cover any shortfall.
Can Your Employer Legally Keep Your Tips?
The short answer is no. Under FLSA Section 3(m)(2)(B), as amended by the Consolidated Appropriations Act of 2018, employers are prohibited from keeping tips received by their employees for any purpose. This rule applies regardless of whether the employer takes a tip credit.
Managers and supervisors are also barred from keeping any portion of an employee’s tips. Under current DOL guidance, a manager or supervisor for FLSA purposes is an employee whose primary duty is managing the business or a recognized department, who customarily and regularly directs at least two full-time employees or their equivalent, and who has authority to hire or fire or whose recommendations about hiring, firing, advancement, promotion, or other status changes are given particular weight.
There is one narrow exception: a manager or supervisor may retain tips that a customer gave directly and solely for service that the manager personally and exclusively provided. However, they cannot participate in any tip pool that distributes other employees’ tips.
Key Takeaway: Federal law prohibits employers, managers, and supervisors from keeping employees’ tips. The only exception is when a manager receives a tip directly from a customer for service the manager solely provided.
What Is a Tip Credit and How Does It Work?
A tip credit allows an employer to pay tipped employees less than the standard minimum wage, with the expectation that tips will make up the difference. The tip credit is currently fixed at $3.02 per hour under Florida law. This means the employer’s direct cash wage obligation is (currently) $10.98 per hour rather than the full $14.00 minimum wage.
Before an employer can take a tip credit, the employer must meet specific legal requirements. Under FLSA regulations, the employer must inform the employee of the tip credit amount, the cash wage the employer will pay, and the fact that the employee gets to keep all tips. If the employer fails to provide this notice, the tip credit may be invalid, and the employee could be entitled to recover the full minimum wage for every hour worked, plus liquidated damages. The notice can be in writing or done verbally, but written notice is the better practice to provide proof that the notice was given to the employees.
The tip credit has remained at $3.02 per hour even as the minimum wage has risen each year under the state’s 2020 constitutional amendment. This means tipped employees receive significantly higher base wages than the federal minimum of $2.13 per hour. The gap continues to widen as the state minimum wage increases.
| Wage Component | Current Rate (Through Sept. 29, 2026) | Rate Starting Sept. 30, 2026 |
|---|---|---|
| Standard Minimum Wage | $14.00/hour | $15.00/hour |
| Tip Credit | $3.02/hour | $3.02/hour |
| Tipped Employee Cash Wage | $10.98/hour | $11.98/hour |
| Federal Tipped Minimum Wage | $2.13/hour | $2.13/hour |
Key Takeaway: Employers may (currently) pay tipped workers $10.98 per hour in cash wages, with tips expected to cover the remaining $3.02. If the employer does not properly notify the employee about the tip credit arrangement, and the tips received by the employees do not exceed $3.02/hour, the credit may be invalid.
How Does Tip Pooling Work in Florida?
Tip pooling is an arrangement where tipped employees contribute a portion of their tips to a shared pool, which is then redistributed among a group of workers. Florida follows federal tip pooling rules because it has not enacted separate tip pooling legislation.
There are two types of tip pools under current law. When an employer takes a tip credit, the pool must be limited to employees who customarily and regularly receive tips, such as servers, bartenders, bussers, and food runners. Back-of-house workers like cooks and dishwashers cannot participate in this type of pool.
When an employer does not take a tip credit and pays the full minimum wage, the pool may include non-tipped employees such as kitchen staff. This “nontraditional” tip pool was authorized by the 2018 CAA amendments. However, even in this arrangement, managers and supervisors are still prohibited from receiving any share of pooled tips.
Regardless of the type of pool, an employer must redistribute all collected tips to eligible employees. The employer cannot keep any portion of a tip pool for itself. Workers in restaurants, hotels, and service businesses should pay close attention to whether their employer’s tip pool meets these requirements.
Key Takeaway: Tip pooling is generally legal, but the rules depend on whether the employer takes a tip credit. Managers and supervisors cannot participate, and employers cannot keep any portion of pooled tips.
What Is the Difference Between a Tip and a Service Charge?
Not every extra charge on a bill is a tip. Understanding the difference between voluntary tips and mandatory service charges is important because they are treated very differently under the law.
A tip is a voluntary payment that a customer freely chooses to give, in an amount of their choosing, to a specific employee. A service charge, by contrast, is a mandatory fee added to a bill by the establishment, typically for large parties, catering events, or banquet services.
Service charges do not automatically belong to employees. Under federal law, a compulsory service charge is not a tip; it becomes part of the employer’s gross receipts, and if the employer distributes it to staff, that payment is treated as wages rather than tips.
In Florida, a 2025 amendment to section 509.214 takes effect July 1, 2026. That law requires public food service establishments to disclose the amount or percentage and the purpose of an ‘operations charge’ and to show separate lines on receipts for gratuity, operations charge, and sales tax. It does not require the business to use the exact phrase ‘tips or business revenue.’
Key Takeaway: Mandatory service charges are not tips under the law. Employers must disclose whether service charges go to employees, and any distributed service charges count as wages rather than tips.
What Side Work Rules Apply to Tipped Employees?
Employers can only take a tip credit for hours spent performing tip-producing work or work that directly supports it. If a tipped employee spends time on tasks unrelated to their tipped occupation, different pay rules may apply.
Under the DOL’s original dual jobs regulation, which was reinstated after a Fifth Circuit court decision in October 2024 vacated the 2021 Dual Jobs Rule, the analysis is straightforward. If an employee works in two distinct occupations, one tipped and one not, the employer can only take the tip credit for hours spent in the tipped occupation. For related side work, such as a server rolling silverware or setting tables, the employer may continue to take the tip credit as long as the duties are part of the tipped occupation.
Because the 2021 Dual Jobs Rule was vacated in 2024, the bright-line 20 percent and 30-minute limits from that rule are not currently in force. Under the DOL’s current position, the original dual-jobs regulation applies again: an employer may take a tip credit for related duties within the tipped occupation, but not for hours worked in a separate, non-tipped occupation.
Key Takeaway: Employers can only take a tip credit for time spent on tipped work or closely related support tasks. If you spend extended time on non-tipped duties, you may be owed the full minimum wage for those hours.
Wage & Hour Attorneys in Miami – BT Law Group
Jason D. Berkowitz, Esq.
Jason D. Berkowitz, Esq., is a founding partner of BT Law Group and a Miami-based labor and employment attorney. Before launching BT Law Group, he was a partner at a national labor and employment firm representing management, including many Fortune 100 companies.
He earned his J.D., cum laude, from the University of Miami School of Law and is admitted to practice in all three federal district courts in Florida as well as the U.S. Court of Appeals for the Eleventh Circuit. This background on both sides of the courtroom gives him unique insight into how employers build wage cases and where those cases can be challenged.
Anisley Tarragona, Esq.
Anisley Tarragona, Esq., is a founding partner of BT Law Group and a Miami-based litigator focused on resolving employment disputes and protecting workers’ rights. Before co-founding BT Law Group, she practiced at a national labor and employment firm representing management exclusively, giving her unique insight into how employers and their attorneys approach workplace disputes.
Ms. Tarragona represents employees in cases involving unpaid wages, discrimination, harassment, wrongful termination, and retaliation. She is fluent in Spanish and frequently advises Spanish-speaking clients. She earned her J.D. from the University of Miami School of Law and is known for her assertive approach and attention to detail in complex employment cases.
What Are Common Tip Violations?
Tip violations are more common than many workers realize, especially in the restaurant and hospitality industries in South Florida. Some violations are intentional, while others result from misunderstanding the law. Either way, employees have the right to recover stolen or improperly withheld tips. Common violations include:
- Managers or supervisors taking a share of employee tips or participating in the tip pool
- Employers using tips to cover business costs, such as breakage, customer walk-outs, or cash register shortages
- Failing to make up the difference when tips plus cash wages fall below the minimum wage
- Requiring tipped employees to share tips with non-eligible workers, such as kitchen staff, when the employer takes a tip credit
- Withholding tips as punishment or discipline
- Failing to provide proper notice before taking a tip credit
Workers should pay attention to their pay stubs and keep records of hours worked and tips received. If you notice that your total compensation falls below the minimum wage or that your tips are being redirected improperly, those are signs of a potential wage violation.
Key Takeaway: Common tip violations include managers skimming tips, employers using tips to cover business losses, and failure to ensure total pay meets the minimum wage. Employees can recover stolen tips plus additional damages under federal and state law.
How Can You File a Tip Theft Claim?
If your employer is taking your tips illegally, you have several options for pursuing a claim. The path you choose may depend on the amount of money involved, whether the violation is ongoing, and whether you prefer an administrative process or a lawsuit.
One option is to file a complaint with the U.S. Department of Labor’s Wage and Hour Division (WHD). The Miami District Office, located at 11400 N. Kendall Drive, Suite 201, handles wage complaints for workers throughout South Florida. You can reach the WHD at 1-866-487-9243 or (305) 598-6607.
The WHD can investigate tip and wage violations, seek back wages, and assess civil money penalties where authorized. Under the current DOL penalty schedule, the maximum civil money penalty for unlawfully keeping employees’ tips under 29 U.S.C. § 203(m)(2)(B) is $1,409 per violation.
Another option for employees in Miami-Dade County is the Miami-Dade County Wage Theft Program, which handles claims for unpaid wages between $60 and $15,000. Under the county’s Wage Theft Ordinance (Chapter 22 of the Miami-Dade County Code of Ordinances), a hearing examiner can order the employer to pay up to three times the amount of wages owed, plus administrative costs. This is an administrative alternative to court.
If the tip issue caused an unpaid minimum wage violation, you may also bring a claim under the Florida Minimum Wage Act, Fla. Stat. § 448.110. Before filing suit, you must give your employer written notice of the claim and allow 15 calendar days to resolve it. If the employer fails to pay, you can sue for the full amount of unpaid wages plus an equal amount in liquidated damages, along with attorney’s fees and costs.
Finally, under the FLSA, employees can file a federal lawsuit to recover unpaid wages. The statute of limitations is two years for standard violations and three years for willful violations. Successful plaintiffs can recover back pay, liquidated damages equal to the back pay amount, and attorney’s fees.
Key Takeaway: Tipped employees can file claims through the DOL, the Miami-Dade Wage Theft Program, or state and federal courts. Deadlines vary, so acting promptly is important to preserve your rights.
Can You Be Fired for Reporting Tip Theft?
No. Both federal and state law protect employees who report wage and tip violations from retaliation. Under the FLSA’s anti-retaliation provision, it is illegal for an employer to fire, demote, reduce hours, or take any other adverse action against an employee for filing a wage complaint or cooperating with a DOL investigation.
Florida Statutes § 448.110(5) provides additional protection. It is unlawful for an employer to discriminate or take adverse action against any person for exercising rights related to the state minimum wage, including the right to file a complaint or to inform others of their potential rights. If you are retaliated against for asserting your rights, you may be entitled to reinstatement, back pay, and additional damages.
Key Takeaway: It is illegal for an employer to retaliate against you for reporting tip theft or other wage and hour violations. Both federal and state law protect workers who assert their wage rights, and unlawful retaliation can result in additional damages.
Holding Employers Accountable for Tip Violations
Having your tips taken by an employer or manager is not just unfair; it is a violation of the law. Whether your employer is skimming from your tips, running an illegal tip pool, or failing to make up the minimum wage, you have the right to recover what you are owed.
Miami wage and hour attorneys Jason D. Berkowitz and Anisley Tarragona at BT Law Group represent tipped workers in wage and hour disputes throughout Miami and South Florida. Our wage and hour lawyers handle claims involving tip theft, improper tip pooling, tip credit violations, and employer retaliation.
Whether your claim involves a single employer or a pattern affecting multiple workers, we can evaluate your situation and pursue the compensation you deserve.
Call BT Law Group at (305) 507-8506 for a case evaluation. Our office is located at 3050 Biscayne Blvd, Suite 205, Miami, FL 33137, and we also serve clients by appointment at our West Palm Beach location. If your employer is taking your tips or violating wage and hour laws, we can review your situation and explain your options.
