Bartenders and servers in Kentucky’s hospitality industry rely on tips. Unfortunately, Kentucky’s wage and hour laws governing tips are outdated and not especially generous.
Tip wage
Kentucky’s tipped minimum wage rate is currently $2.13 per hour and is not based upon a percentage rate. This rate is the same as the federal government’s tip wage in the Fair Labor Standards Act set in 1996.
Tips and gratuities are voluntary monetary contributions paid by a customer to a worker for their services. Employers may pay employees the tipped minimum wage if employees customarily and regularly receive over $30 each month in customer tips.
If an employer elects to pay qualifying workers the tipped minimum wage rate, they must also assure that these employees are paid the standard minimum wage when tipped wages are combined with the tips earned. The standard minimum hourly wage in Kentucky is now $7.25.
The difference between the tipped minimum wage and the standard minimum wage that is credited to earned tips is known as the tip credit. Employers must pay the shortage if the tip credit and the tip wage combined do not equal $7.25 per hour. In other words, the tipped minimum wage of $2.13 plus the actual tips must be at least $7.25 per hour or the employer must make up any difference.
Tip pooling
Employers may not require that their workers participate in a tip pool or sharing agreement where employees must turn over all or part of their tips to a pool for distribution to other employees.
Employees, however, may agree to enter into a tip pooling agreement with other workers. Their employers may notify about the existence of the tip pool and provide their typical arrangements for the pool.
Employers must also have, at their own expense, a service for protecting tips placed into the pool. When employers safeguard tip pools, they need to properly identify the account, keep the tips separate from other business records and allow the tip pool participants to examine the pool.
Attorneys can help with compliance with Kentucky’s wage laws and FLSA. They can also help assure rights are protected in investigations and hearings.