(October 17, 2013) Effective January 1, 2014, Florida’s minimum wage will increase from $7.79 to $7.93, with a minimum wage of at least $4.91 per hour for tipped employees. The minimum wage rate is recalculated yearly based on the percentage increase in the federal Consumer Price Index for Urban Wage Earners and Clerical Workers in the South Region for the 12-month period prior to September 1, 2012.  On November 2, 2004, Florida voters approved a constitutional amendment which created Florida’s minimum wage.  The minimum wage applies to all employees in the state who are covered by the federal minimum wage. Florida Statutes require employers who must pay their employees the Florida minimum wage to post a minimum wage notice in a conspicuous and accessible place in each establishment where these employees work. This poster requirement is in addition to the federal requirement to post a notice of the federal minimum wage. Florida’s minimum wage poster is available for downloading in English and Spanish from the Florida Department of Economic Opportunity’s website at: http://www.floridajobs.org. For more information please click here.

(Published by Sun-Sentinel, October 22, 2013)

Gambling interests say they will create thousands of jobs in Florida if we legalize Vegas-style casinos. When Bugsy Siegel essentially created Las Vegas by building casinos in a barren desert in Nevada, his enterprise did create jobs – because virtually nothing existed before the casinos.

The problem is when casinos are introduced into an existing base of commerce, they simply re-shuffle the deck of consumer spending. This is called “cannibalization” — when existing consumer spending shifts from one pocket into another.

Quite simply, the economic problem with adding casinos in Florida is that Florida is not a barren desert in Nevada or a remote swamp in Mississippi.

When casinos move in, they don’t simply compete for consumer spending. They use the predatory business practice of giving away things that are a source of profit for longstanding Florida businesses — things like “comp” meals and hotel stays.

But don’t take my word for it, just look at Atlantic City, where 40 percent of restaurants and a third of the retail stores went out of business after casinos opened. Crime skyrocketed and the population actually shrank. That’s what happens when casinos are dropped into an already-developed economy.

The euphemistic term “reallocation of consumer spending” was a key phrase in testimony last week in Tallahassee before the Senate Gaming Committee. Spectrum Gaming Group, the gambling industry’s go-to economic experts, were paid $400,000 by the state to study how Vegas-style casinos would affect Florida’s economy. They dryly noted that much of the impact would not come from new spending, but from “reallocation of consumer spending,” otherwise known as cannibalization.

The closure of so many restaurants and retail establishments after casinos moved in was a searing experience for Atlantic City.

And thirty-five years after casinos opened in Atlantic City, things have gotten worse, not better.

Now that the casinos have devoured the other businesses around them, they have started to devour each other. Oversaturation of casinos in Atlantic City and neighboring states has caused a 7-year gambling revenue skid in Atlantic City. Casino profits are down by half in one year alone.

And for the first time ever, Atlantic City casinos are adding strip clubs to try to draw more gamblers. And taxpayers are now having to bail-out failing casinos — over a quarter-billion dollars for one casino alone — because once government relies on gambling as a major source of revenue, casinos become too big to fail.

Atlantic City’s experience is not unique. Casinos pose a threat to local businesses wherever they emerge. John Kindt, professor emeritus of business at the University of Illinois who has testified before Congress, noted that in a Minnesota study, restaurants within 30 miles of a casino lost 25 to 50 percent of their business.

“For every job created by legalized gambling, the local economy loses one to two jobs,” Kindt said. “Intense gambling activities … will tend to cannibalize a pre-existing tourist economy.”

Rod Motamedi, a senior economic associate for Regional Economic Models Inc. who testified before the Senate and House Select Gaming Committee last week in Tallahassee, cited the potential loss to “retail, food service and similar businesses that compete for finite consumer spending.”

Motamedi also said, “You are making a choice to not spend money on something else. And that choice implies a loss of revenues or a loss of business for the other thing.”

The problem is that by the estimates provided by the legislature’s study, less than 5 percent of the money spent in Florida casinos would be from tourists — and many of those tourists are already coming here.

So casinos have their eye on Florida, not for what they can bring to Florida, but what they can take from us.

If there’s one thing that Florida history should teach us, it’s that gambling is nothing more than an economic shell game, where the only real winner is the house.

Carol B. Dover is President/CEO, Florida Restaurant & Lodging Association. 

Media Contact:
Elizabeth Ray
FRLA Press Secretary
850-224-2250 ext. 255
eray@frla.org

(November 13, 2013) The Florida Restaurant and Lodging Association (FRLA) is proud to sponsor Enjoy Arts and Tastes-St. Pete, a three day festival of food, wine and the arts featuring renowned chefs, restaurants and artists. Proceeds from ticket sales will benefit FRLA’s Educational Foundation, a non-profit organization that provides school-to-career training for high school students interested in the hospitality industry. The festival is scheduled for November 15-17, 2013 in and around St. Petersburg.

Governor Rick Scott announced that according to preliminary estimates* released by VISIT FLORIDA – the state’s official tourism marketing corporation – 22.9 million visitors came to Florida in the third quarter of 2013 (July-September), an increase of 1.7 percent over the same period in 2012.  These numbers represent the largest third quarter for visitation in the state’s history.

Governor Scott said, “Today’s announcement of another record quarter for visitation clearly shows ‘It’s Working’ in Florida.  Because every 85 visitors to our state supports one Florida job; a growing tourism industry equates to more jobs for Florida families and a stronger economy.  As we move toward our third consecutive year of record tourism growth, it is clear why the Sunshine State remains the top travel destination across the world. ”

Through the first three quarters of 2013, Florida welcomed 72.6 million visitors – an increase of 3.4 percent over the same period last year.  Visitor spending in Florida for January-August 2013 (last reported month) was $51.8 billion, representing a year-over-year increase of 5.8 percent from the same period in 2012.  Direct travel-related employment in Florida for January-August (last reported month) rose 2.8 percent, adding 29,700 jobs since this same time one year ago.  Each of these figures marks a record, making the first three quarters of 2013 the largest nine-month period in the history of Florida’s tourism industry.

“So far this year, we’re up nearly 2.5 million visitors who increased their spending by almost $3 billion, led by a double-digit increase in international visitors,” said Tammy Gustafson, Chair of the VISIT FLORIDA Board of Directors. “This continued momentum is a testament to the strength of VISIT FLORIDA’s marketing efforts, the power of the Sunshine State brand and the dedication of the nearly 1.1 million Floridians who work in the state’s tourism industry.”

An estimated 19.5 million domestic visitors came to Florida during the third quarter of 2013, representing a 0.5 percent increase from the same period in 2012. Florida welcomed 2.9 million overseas visitors in Q3 2013, representing a 10.1 percent increase over Q3 2012, and 516,000 Canadian visitors during the same period, representing a 2.9 percent increase from the previous year.

“Record visitor numbers equate to record visitor spending,” said Will Seccombe, President and CEO of VISIT FLORIDA. “With taxable sales up, occupancy rates up, rental car collections up, bed taxes up and average daily room rates up, Florida’s tourism industry has never been stronger.”

Carol Dover, President and CEO of the Florida Restaurant and Lodging Association said, “These newly released tourism numbers are encouraging to our more than 10,000 members of the Florida Restaurant and Lodging Association in our effort to attract over 100 million visitors to the Sunshine State. As Florida’s largest employer, our tourism and hospitality industry is on the front lines each and every day in providing a world class experience to visitors coming to our state for business meetings, conventions, vacations and milestone celebrations. We thank Florida Governor Rick Scott and members of the Florida Legislature for providing a pro-business and pro-family environment which not only attracts national and international tourists, but supports job creation and growth here at home.”

Additional Preliminary Data:
• The Average Daily Room Rate rose 3.6 percent to $102.69 and the occupancy rate for Florida hotels increased 1.9 percentage points to 62.7 percent in Q3 2013 compared to Q3 2012.

• Tourism-related employment has lead the state in growth for 41 straight months

• Nearly 13.6 million Florida residents are estimated to have taken a pleasure trip during Q3 2013.

• The share of in-state pleasure trips by residents was 42.3 percent, resulting in more than 5.7 million pleasure trips in-state – a 6.2 percent increase from the same time last year.

• Traffic at the state’s five Official Florida Welcome Centers managed by VISIT FLORIDA was up 4.0% in Q3 2013.

To view additional Florida visitor data, go the Research page on VISIT FLORIDA’s media website.

Governor Rick Scott today announced that the statewide unemployment rate for September 2013 was 6.8 percent and 6.7 percent for October 2013. The statewide unemployment rate has remained below the national average of 7.3 percent since March 2013. Florida has created 440,900 private sector jobs since December 2010.

Governor Scott said, “Florida’s unemployment rate is now below seven percent at 6.7 percent in October 2013. This is our eighth month below the national average. Over the last two months, the state has added more than 67,000 private sector jobs. This is great news for Florida families.

“Our total job creation is now at 440,900, but we have more work to do. We don’t just want a state where job creation reaches a certain number, or unemployment falls to a certain number. We want to create an opportunity economy. We want a state with dynamic, growing industries that will create jobs and careers for generations to come.”

The state gained 20,800 private sector jobs in September 2013 and 46,400 private sector jobs in October 2013. Florida’s annual job growth rate from October 2012 to October 2013 is the fastest since June 2006. With 46,400 new private sector jobs last month, this is the most growth in a month since December 2010. Florida’s annual job growth rate has exceeded or been equal to the nation’s job growth rate since March 2012.

“Today’s numbers represent another successful chapter in Florida’s remarkable turnaround story under the Scott Administration,” said Jesse Panuccio, Executive Director of the Florida Department of Economic Opportunity. “We continue to outpace the nation with respect to job growth, job demand, and unemployment decline, which is further proof that policy matters and the Governor’s pro-growth agenda is working.”

Since December 2010, Florida’s statewide unemployment rate has dropped 4.4 percentage points, from a rate of 11.1 percent to October’s rate of 6.7 percent. Florida’s September 2013 rate was down 0.2 percentage point from the August rate of 7.0 percent, and the rate fell another 0.1 percentage point in October 2013. The current rate of 6.7 percent represents the lowest statewide unemployment rate since August 2008. It is also a decrease of 1.5 percentage points from October 2012, when the rate was 8.2 percent. Florida’s unemployment rate has now declined year-over-year for 36 consecutive months.

More Jobs Being Created

• Florida experienced positive annual job growth for 39 consecutive months.

• Florida’s job growth month-to-month has been positive for 26 of the last 28 months.

• Florida has created 440,900 new private sector jobs since December 2010.

• Florida is expected to create more than 1 million new jobs by 2018, according to the Florida Economic Estimating Conference.

• Florida job postings compiled by the Help Wanted OnLine data series from The Conference Board showed 258,128 openings in October 2013 (seasonally adjusted).

Home Sales Robust

• Home sales remain robust as the backlog of existing homes on the market is down by 36 percent from November 2011 (Florida Realtors).

• Florida median home prices were up 16.6 percent over the year in October 2013.

• Florida housing starts were up 30.7 percent over the year in August 2013 (latest data available).

Economic Growth Trends Up Across State

• A recent U.S. Census Survey reported that Florida experienced an influx of people moving into the state. Florida also led the nation in migrations from Puerto Rico

• Florida is running a trade surplus of over $18 billion – with $90.4 billion in exports and $71.8 billion in imports in 2012, up from $86.8 billion in exports in 2011 and $62.4 billion in imports in 2011.

Workforce Boards Assisting in Employment

• In October, Florida’s 24 Regional Workforce Boards reported more than 48,400 Floridians were placed in jobs.An individual who receives employment and training assistance through a One-Stop Career Center and finds a job within 180 days is deemed a placement and may be reported by a regional workforce board. Of these individuals, 14,119 previously received Reemployment Assistance.

• In 2012, more than 426,000 Floridians were placed in jobs, with 111,173 former claimants finding employment.

To view the September and October 2013 monthly employment data visit: www.floridajobs.org/labor-market-information/labor-market-information-press-releases/monthly-press-releases

Some employers will receive relief under the Affordable Care Act’s employer mandate next year, the White House announced today.

The ACA’s employer mandate eventually will require employers of 50 or more full-time-equivalent employees to either offer health benefits to their full-time employees or face possible penalties. The mandate originally was due to take effect in 2014, but the White House last summer moved the effective date to 2015.

In a final rule issued today to explain how the mandate will work, the Obama Administration said that employers with 50 to 99 full-time-equivalent employees won’t be subject to the law’s employer-mandate penalties until 2016.

This change, and other changes in the final rule, will provide additional flexibility for employers, especially those at or near the 50 FTE-employee definition of a “large employer” under the ACA. The National Restaurant Association has been pressing regulators for these changes and will continue to do so. The NRA also continues to advocate for structural changes in the law that only Congress can address, such as the definition of full-time employee.

According to Treasury Department officials, other provisions of the final rule:

• Make permanent the “look-back measurement method:” The final rule gives covered employers the option of using a look-back period to measure the full- or part-time status of variable-hour and seasonal employees. This measurement method can give employers more stability and predictability in knowing which employees are eligible for health care coverage under the law. The Treasury Department also clarified that seasonal employees in positions working six months or less in a year generally aren’t considered full-time employees.
• Offer transition relief for certain employer penalties: Penalty “A” will apply under the law to covered employers who fail to offer minimum essential coverage to “substantially all” of their full-time employees. For 2015, the Treasury Department says “substantially all” means employers must offer coverage to at least 70 percent of full-time employees. Starting in 2016, covered employers must offer coverage to 95 percent of their full-time employees to avoid Penalty A.
• Offer transition relief for employers with non-calendar-year health plans. For covered employers who offer non-calendar-year plans, the final rule clarifies that the employer mandate will take effect on the first day of their plan year in 2015, rather than Jan. 1, 2015.

The National Restaurant Association said the final rule provided additional relief for some employers and thanked the Treasury Department for working with the NRA and the Employers for Flexibility in Health Care Coalition to provide flexibility in the rule.

See the Treasury Department’s press statement and fact sheet for more information. The National Restaurant Association will update its Health Care Headquarters with further analysis of the final rule.

Still to come: The Treasury Department has not yet finalized major new reporting requirements for employers under the law. The first information reports will be required in early 2016, based on data tracked in 2015. The National Restaurant Association reiterated its concern that these rules be as streamlined as possible, since these could contain significant compliance costs for restaurants.

The NRA also called on Congress to address other parts of the law. As restaurants nationwide struggle with ACA implementation, challenges remain that now only Congress can address. The NRA asks Congress to come together in a bipartisan manner to better align the definition a full-time employee with current business practices, eliminate the duplicative automatic-enrollment provision, and simplify the determination of a small business under the law.

For continuing updates on the law, visit the NRA’s Health Care Headquarters.

Contact:

Elizabeth Ray
FRLA Press Secretary
850.224.2250 x255
ERay@FRLA.org
Members of the Florida Restaurant and Lodging Association are preparing for a busy Valentine’s Day.  According to the National Restaurant Association (NRA) about one-quarter of Americans will dine-out this Friday and through the weekend, making it the second most popular holiday for dining out after Mother’s Day.

If you are still looking for a gift, the NRA’s research shows that nearly one-third of American adults would like to receive a restaurant gift card as a Valentine’s Day gift. Given a list of six Valentine’s Day gift options, and asked which one they would most like to receive as a Valentine’s Day gift, 31 percent of adults favored restaurant gift cards, followed by jewelry, clothing/apparel, flowers, chocolate and perfume/cologne.

“We are fortunate here in Florida to have world-class service and excellent dining experiences not just on holidays like Valentine’s Day, but every day of the year,” said Carol Dover, President and CEO of the Florida Restaurant and Lodging Association. “This Valentine’s Day weekend, the FRLA encourages the public to enjoy time with those closest to their hearts. Share a meal with family, friends and significant others at one of Florida’s more than 48,000 licensed food service establishments.”

For more information about Valentine’s Day statistics from the National Restaurant Association, please click here.

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About the Florida Restaurant and Lodging Association
FRLA’s mission is to ‘Protect, Educate and Promote’ Florida’s hospitality industry – which represents a $71.8 billion industry, 23% of Florida’s economy, $4.3 billion in sales tax revenue, and over one million employees, making it Florida’s largest employer. It is Florida’s premier non-profit, hospitality industry trade association. FRLA safeguards the needs of the hospitality industry, improves the business climate, promotes the highest levels of quality and safety for our patrons, provides legislative advocacy, and eases navigation of government regulation. The Association represents and serves more than 10,000 independent and household name members, suppliers, and theme parks.

TAMPA, Fla.–Today, Governor Rick Scott announced that according to preliminary estimates* released today by VISIT FLORIDA, 26.7 million visitors came to Florida in the first quarter of 2014 (January-March), an increase of 2.0 percent over the same period in 2013.  This represents the largest quarter for visitation Florida has ever experienced, exceeding the previous high of 26.2 million in Q1 2013.  The average number of direct travel-related jobs in Q1 2014 was also a record high, with 1,125,300 Floridians employed in the tourism industry – up 3.5 percent from the same period in 2013.

Governor Scott said, “Today’s news that we have another record quarter for visitation is great for Florida families. A growing tourism industry is vital to growing jobs in Florida, and creating an opportunity economy. We are off to a great start to reaching our goal of 100 million visitors to Florida this year.”

VISIT FLORIDA estimates that 2.7 million overseas visitors and 1.5 million Canadians came to Florida in Q1 2014, both of which are record highs and represent 1.8 percent and 1.6 percent increases over Q1 2013 respectively.  Estimates reflect a 2.0 percent increase in domestic visitors to Florida in Q1 2014 and show that Floridians took just over 4.2 million in-state pleasure trips during the first quarter.

“Experiencing the largest quarter for tourism in our state’s history, including a record number of tourism-related jobs, proves that tourism continues to be a vital force in Florida,” said Tammy Gustafson, Chair of the VISIT FLORIDA Board of Directors.  “These records also emphasize the power of tourism as a way to sustain Florida’s economic growth.”

Tourism and recreation taxable sales for Florida increased year-over-year for January and February 2014 (last reported month), representing a 7.2 percent increase over the same period in 2013.  For Q1 2014, the average daily room rate (ADR) rose 5.1 percent, the occupancy rate for Florida hotels increased 2.7 percent and the demand in rooms sold grew 3.0 percent compared to quarter one 2013.

“Florida tourism is maintaining strong momentum with all indicators up across the board for the quarter,” said Will Seccombe, President and CEO of VISIT FLORIDA.  “With occupancy, rooms sold, average daily room rate and tourism and recreation taxable sales all continuing to climb, we are well on our way to making Florida the No. 1 travel destination in the world.”

To view additional Florida visitor data, go the Research page on VISIT FLORIDA’s media website.

*Preliminary estimates are issued 45 days after the end of each calendar quarter. Final estimates are released when final data are received for all estimates in the report.

Here are the reactions of key industry leaders to today’s record announcement:

Bill Talbert, Member of the VISIT FLORIDA Board of Directors Executive Committee and President & CEO of the Greater Miami Convention & Visitors Bureau

“As a founding partner of VISIT FLORIDA, we are thrilled with the tourism records being set by the State ofFlorida.  Tourism isMiami’s #1 industry contributing to the economic well-being of the community with record tourism and jobs.  We look forward to expanding our partnership with VISIT FLORIDA to ensure the continued growth at record levels of our tourism industry.”

Virginia Haley, Member of the VISIT FLORIDA Visitor Services Committee and President of Visit Sarasota County

“These numbers validate the public private partnership model of VISIT FLORIDA and the success that comes to the state’s economy when we all join together to promote Florida, the best tourism destination in the world.”

Carol Dover, Member of the VISIT FLORIDA Board of Directors and President & CEO of the Florida Restaurant & Lodging Association

“These record numbers indicate the hospitality and tourism industry in Florida is reaching grander levels of success under Governor Rick Scott’s leadership. We are thrilled to see millions upon millions of visitors taking advantage of world-class hotels, restaurants and attractions here in the Sunshine State and we are excited to watch these outstanding statistics continue to multiply in 2014 and in turn spur economic growth.”

Mark Wilson, President & CEO of the Florida Chamber of Commerce

“Tourists have choices, and when they want to go to paradise, they’re choosing Florida. Today’s record breaking tourism numbers are further proof that Florida’s global role as a top destination continues growing stronger, and as a result, Florida’s families and small businesses are benefiting.”

Rick McAllister, President & CEO of the Florida Retail Federation

“Florida’s retailers benefit from our state’s status as the premier destination for visitors nationwide and internationally, and the strong growth of tourism helped retailers create 55,000 jobs last year. We congratulate Florida’s leadership on the wise investment of resources in tourism marketing, which is clearly paying dividends for our state economy.”

John Sebree, Senior Vice President of Public Policy for the Florida Association of Realtors

“A record year in tourism certainly means more visitors to our theme parks and beautiful beaches, but tourism also goes hand in hand with the strength of our real estate market.  Many of the state’s domestic and international visitors decide to buy a Florida property and that, in turn, creates an even greater number of tourists and jobs.  We have heard that the purchase of a home by someone outside Florida can create an additional 25 round trip flights per year and countless additional hotel nights for family and friends who then become tourists themselves to our beautiful state.”

Bill Lupfer, VISIT FLORIDA Chair of Public Affairs and President & CEO of the Florida Attractions Association

“Florida is the finest tourism destination in the world, and three record-breaking years for the industry have solidified our position as the lifeblood of the state’s economy.  We applaud Governor Scott’s support of the state’s tourism industry and look forward to expanding job opportunities for Floridians in 2014.”

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For additional information, contact Kathy Torian at ktorian@VISITFLORIDA.org

or (850) 205-3865.

As the Sunshine State’s No. 1 industry, tourism was responsible for welcoming 94.7 million visitors in 2013 who spent $76.1 billion, generating 23 percent of the state’s sales tax revenue and employing nearly 1.1 million Floridians.  For every $1 spent on tourism marketing, VISIT FLORIDA – the state’s official tourism marketing corporation – generates more than $390 in tourism spending and $23 in new sales tax collections, paid by visitors, not residents.  VISIT FLORIDA promotes tourism to Florida through sales, advertising, promotions, public relations and visitor services programs.  As a public/private partnership, VISIT FLORIDA serves nearly 12,000 tourism industry businesses, including major strategic alliance partnerships with Disney Destinations, The Hertz Corporation, SeaWorld Parks & Entertainment and Universal Orlando.  To learn more about VISIT FLORIDA, please go towww.VISITFLORIDA.orgor follow our corporate blog at www.SunshineMatters.org.

Effective January 1, 2015, Florida’s minimum wage will increase from $7.93 to $8.05, with a minimum wage of at least $5.03 per hour for tipped employees.

The minimum wage rate is recalculated yearly based on the percentage increase in the federal Consumer Price Index for Urban Wage Earners and Clerical Workers in the South Region for the 12-month period prior to September 1, 2013.

On November 2, 2004, Florida voters approved a constitutional amendment which created Florida’s minimum wage.  The minimum wage applies to all employees in the state who are covered by the federal minimum wage.

Florida Statutes require employers who must pay their employees the Florida minimum wage to post a minimum wage notice in a conspicuous and accessible place in each establishment where these employees work. This poster requirement is in addition to the federal requirement to post a notice of the federal minimum wage. Florida’s minimum wage poster is available for downloading in English and Spanish from the Florida Department of Economic Opportunity’s website.

U.S. Department of Labor
Wage and Hour Division
Fact Sheet #15: Tipped Employees Under the Fair Labor Standards Act (FLSA)
(Revised March 2011)

This fact sheet provides general information concerning the application of the FLSA to employees who receive tips.

Characteristics

Tipped employees are those who customarily and regularly receive more than $30 per month in tips. Tips are the property of the employee. The employer is prohibited from using an employee’s tips for any reason other than as a credit against its minimum wage obligation to the employee (“tip credit”) or in furtherance of a valid tip pool. Only tips actually received by the employee may be counted in determining whether the employee is a tipped employee and in applying the tip credit.

Tip Credit: Section 3(m) of the FLSA permits an employer to take a tip credit toward its minimum wage obligation for tipped employees equal to the difference between the required cash wage (which must be at least $2.13) and the federal minimum wage. Thus, the maximum tip credit that an employer can currently claim under the FLSA is $5.12 per hour (the minimum wage of $7.25 minus the minimum required cash wage of $2.13).

Tip Pool: The requirement that an employee must retain all tips does not preclude a valid tip pooling or sharing arrangement among employees who customarily and regularly receive tips, such as waiters, waitresses, bellhops, counter personnel (who serve customers), bussers, and service bartenders. A valid tip pool may not include employees who do not customarily and regularly received tips, such as dishwashers, cooks, chefs, and janitors.

Requirements

The employer must provide the following information to a tipped employee before the employer may use the tip credit:

• 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 minimum required cash wage of $2.13 and the current 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 limited to employees who customarily and regularly receive tips; and
• that the tip credit will not apply to any tipped employee unless the employee has been informed of these tip credit provisions.

The employer may provide oral or written notice to its tipped employees informing them of items 1-5 above. An employer who fails to provide the required information cannot use the tip credit provisions and therefore must pay the tipped employee at least $7.25 per hour in wages and allow the tipped employee to keep all tips received.

Employers electing to use the tip credit provision must be able to show that tipped employees receive at least the minimum wage when direct (or cash) wages and the tip credit amount are combined. If an employee’s tips combined with the employer’s direct (or cash) wages of at least $2.13 per hour do not equal the minimum hourly wage of $7.25 per hour, the employer must make up the difference.

Retention of Tips: A tip is the sole property of the tipped employee regardless of whether the employer takes a tip credit. The FLSA prohibits any arrangement between the employer and the tipped employee whereby any part of the tip received becomes the property of the employer. For example, even where a tipped employee receives at least $7.25 per hour in wages directly from the employer, the employee may not be required to turn over his or her tips to the employer.

Tip Pooling: As noted above, the requirement that an employee must retain all tips does not preclude a valid tip pooling or sharing arrangement among employees who customarily and regularly receive tips. The FLSA does not impose a maximum contribution amount or percentage on valid mandatory tip pools. The employer, however, must notify tipped employees of any required tip pool contribution amount, may only take a tip credit for the amount of tips each tipped employee ultimately receives, and may not retain any of the employees’ tips for any other purpose.

Dual Jobs: When an employee is employed by one employer in both a tipped and a non-tipped occupation, such as an employee employed both as a maintenance person and a waitperson, the tip credit is available only for the hours spent by the employee in the tipped occupation. The FLSA permits an employer to take the tip credit for some time that the tipped employee spends in duties related to the tipped occupation, even though such duties are not by themselves directed toward producing tips.

For example, a waitperson who spends some time cleaning and setting tables, making coffee, and occasionally washing dishes or glasses is considered to be engaged in a tipped occupation even though these duties are not tip producing. However, where a tipped employee spends a substantial amount of time (in excess of 20 percent in the workweek) performing related duties, no tip credit may be taken for the time spent in such duties.

Service Charges: A compulsory charge for service, for example, 15 percent of the bill, is not a tip. Such charges are part of the employer’s gross receipts. Sums distributed to employees from service charges cannot be counted as tips received, but may be used to satisfy the employer’s minimum wage and overtime obligations under the FLSA. If an employee receives tips in addition to the compulsory service charge, those tips may be considered in determining whether the employee is a tipped employee and in the application of the tip credit.

Credit Cards: Where tips are charged on a credit card and the employer must pay the credit card company a percentage on each sale, the employer may pay the employee the tip, less that percentage. For example, where a credit card company charges an employer 3 percent on all sales charged to its credit service, the employer may pay the tipped employee 97 percent of the tips without violating the FLSA. However, this charge on the tip may not reduce the employee’s wage below the required minimum wage. The amount due the employee must be paid no later than the regular pay day and may not be held while the employer is awaiting reimbursement from the credit card company.

Youth Minimum Wage: The 1996 Amendments to the FLSA allow employers to pay a youth minimum wage of not less than $4.25 per hour to employees who are under 20 years of age during the first 90 consecutive   calendar days after initial employment by their employer. The law contains certain protections for employees that prohibit employers from displacing any employee in order to hire someone at the youth minimum wage.

Typical Problems

Minimum Wage Problems:

• Where an employee does not receive sufficient tips to make up the difference between the direct (or cash) wage payment (which must be at least $2.13 per hour) and the minimum wage, the employer must make up the difference.
• Where an employee receives tips only and is paid no cash wage, the full minimum wage is owed.
• Where deductions for walk-outs, breakage, or cash register shortages reduce the employee’s wages below the minimum wage, such deductions are illegal. Where a tipped employee is paid $2.13 per hour in direct (or cash) wages and the employer claims the maximum tip credit of $5.12 per hour, no such deductions can be made without reducing the employee below the minimum wage (even where the employee receives more than $5.12 per hour in tips).
• Where a tipped employee is required to contribute to a tip pool that includes employees who do not customarily and regularly receive tips, the employee is owed all tips he or she contributed to the pool and the full $7.25 minimum wage.

Overtime Problems:

• Where the employer takes the tip credit, overtime is calculated on the full minimum wage, not the lower direct (or cash) wage payment.  The employer may not take a larger tip credit for an overtime hour than for a straight time hour (i.e., $4.00 tip credit per hour for the nonovertime hours and $5.12 tip credit per hour for overtime hours).
• Where overtime is not paid based on the regular rate including all service charges, commissions, bonuses, and other remuneration.

Where to Obtain Additional Information

For additional information, visit our Wage and Hour Division Website: http://www.wagehour.dol.gov

and/or call our toll-free information and helpline, available 8 a.m. to 5 p.m. in your time zone, 1-866-4USWAGE (1-866-487-9243).

This publication is for general information and is not to be considered in the same light as official statements of position contained in the regulations.

U.S. Department of Labor

Frances Perkins Building

200 Constitution Avenue, NW

Washington, DC 20210

1-866-4-USWAGE

TTY: 1-866-487-9243

Contact U.S. Department of Labor