Work that is not part of the tipped occupation: Any work that (1) does not provide service to customers for which tipped employees receive tips and (2) does not directly support tipproducing work.Tip-producing work: any work performed by a tipped employee that provides service to customers for which the tipped employee receives tips. Tipped employees: Employees engaged in occupations in which they customarily and regularly receive more than $30 a month in tips.If the amount of tips received by a tipped employee plus direct cash wages does not equal at least $7.25 per hour worked during any workweek, the employer must make up the difference. The employer may not take a tip credit that exceeds the amount of tips received. The maximum FLSA hourly tip credit an employer may take in a non-overtime workweek is $5.12 per hour, which is the difference between the direct cash wage paid, which must be no less than $2.13 per hour, and the federal minimum wage of $7.25 per hour. Tip Credit: Employers may satisfy a portion of their minimum wage obligation to a tipped employee based on tips received by the tipped employee, provided the employer meets certain requirements.Substantial amount of time: An employee has performed directly supporting work for a substantial amount of time if the directly supporting work exceeds 20 percent of the total time in a workweek for which the employer has taken a tip credit, or if the directly supporting work is performed for any continuous period of time that exceeds 30 minutes.An employer may only take a tip credit for the work performed by the tipped employee that is part of the employee’s tipped occupation. Dual jobs: Where an employee is employed by the same employer in both a tipped occupation and in a non-tipped occupation.Directly supporting work: Work performed by a tipped employee in preparation of or to otherwise assist tip-producing customer service work.The direct cash wage must be at least $2.13 an hour. Direct cash wage: The “direct cash wage” is the amount paid by the employer directly to the tipped employee before taking into account tips received by the employee.Note: Some states have labor laws that afford workers additional rights and protections employers must comply with both federal and state laws.
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