What You Need to Know About Georgia’s Tipped Employee Rights
Many Georgia employees receive tips for services such as moving furniture, waiting tables, serving drinks, cutting hair, and painting nails. Here’s everything you need to know about tipped employee rights in Georgia.
In Georgia, tipped employees must still earn the federal minimum wage of $7.25 an hour. In addition, Georgia’s guidelines limit unfair tip pooling.
Tipped Employee Definition in Georgia
Federal law defines a tipped employee as any worker who regularly receives more than $30 a month in tips. Georgia considers all other workers non-tipped employees.
Related: Georgia Pregnancy Leave FAQs
Minimum Wage for Tipped Employees in Georgia
Georgia’s minimum wage is $5.25 per hour. However, this rate only applies to certain workers. Under the federal Fair Labor Standards Act, tipped workers in Georgia must earn the federal minimum wage of $7.25 per hour.
While Georgia requires tipped workers to earn at least $7.25 per hour, not all the money has to come from an employer. Instead, Georgia allows employers to claim tip credits for tipped workers.
Tip Credits in Georgia
In Georgia, employers can claim tip credits for tipped employees. A tip credit allows a Georgia employer to pay a tipped employee less than minimum wage while ensuring the employee receives at least minimum wage.
An employer can claim a tip credit when they pay an employee less than minimum wage and apply the employee’s tips to their hourly wage. As a result, the tip credit is the difference between a tipped employee’s wages and the federal minimum wage of $7.25 per hour.
Under federal rules, Georgia employers must pay tipped workers at least $2.13 per hour. A wage of $2.13 per hour falls $5.12 short of the federal minimum wage of $7.25 per hour. Employers can claim a $5.12 tip credit to make up the difference.
As a result, a Georgia employee can legally receive $2.13 per hour from their employer, as long as they also receive at least $5.12 per hour in tips. The employer must make up the difference if an employee fails to make enough tips in a workweek to reach the minimum wage of $7.25 per hour,
Georgia employers can claim a tip credit for tipped employees but must pay non-tipped employees at least $7.25 per hour.
Example of a Tip Credit in Georgia
Let’s imagine Mover Manny works for Heavy Moving Company in Georgia. Manny is a tipped employee because he usually receives around $100 per month in tips, which is more than the minimum of $30.
Heavy Co. pays Manny $5 per hour for moving jobs, $2.25 below the $7.25 federal minimum wage. Heavy Co. claims the remaining $2.25 as a tip credit, so as long as Manny makes $2.25 per hour in tips, he will receive at least $7.25 per hour.
One week, Manny only makes $2 per hour in tips. He is 25 cents short of the minimum wage! To fill the gap, Heavy Co. must pay Manny 25 cents per hour, bringing him back up to $7.25 per hour.
Tip-Splitting in Georgia
Tip-splitting, also known as tip pooling, is a common practice in many businesses. In Georgia, it is legal for employers to require employees to put a portion of their tips in a tip pool. Employees only have to contribute a reasonable share of their tips in the tip pool.
All tipped employees then receive a portion of the tip pool. This practice balances out tips among workers.
Georgia employers who require tip pooling can still claim a tip credit. However, once they claim the credit, only tipped workers can draw from the pool. For example, at a restaurant, only waiters and cashiers can draw from the tip pool, while cooks and dishwashers can’t. If an employer does not claim a tax credit, even non-tipped employees can draw from the tip pool.
FAQs About Tipped Employee Rights in Georgia
Can Georgia employers claim tip credits for non-tipped work?
Georgia employers can only claim tip credits if the non-tipped work supports tipped work. In addition, the non-tipped work must represent fewer than 20% of a worker’s duties.
What is an example of an employer claiming a tip credit for non-tipped work?
A waiter/waitress who spends 90% of their time taking orders, and 10% of their time cleaning and dishwashing, is a tipped employee. A Georgia employer can claim a tip credit for all the waiter/waitresses’ work, even though cleaning doesn’t directly produce tips.
If the waiter/waitress spends 30% of their time cleaning and dishwashing, the employer cannot claim a tip credit for that time. As a result, the employer would have to pay the waiter/waitress at least minimum wage.
In Georgia, can managers draw from a tip pool?
No, Georgia prohibits employers, managers, and supervisors from receiving a share of a tip pool.
Do mandatory service charges count as a tip?
No, Georgia considers mandatory service charges an involuntary fee paid to the employer. A mandatory service charge is a fee some businesses add for large parties. Georgia does not consider this a tip because it is not optional, and the customer does not decide who receives the money.