Tip Credit

Tipped Employees Must Have Actual Notice of Use of Tip Credit

Posted on November 14, 2014 by Elaine I. Hogan

The tip credit permitted under the Fair Labor Standards Act (“FLSA”) has always presented challenges to restaurants and other employers seeking to apply it correctly. Last month, the First Circuit addressed the tip credit and the question of the type of notice which must be given to employees regarding its use in the case of Perez v. Lorraine Enters., No. 13-1685 (1st Cir. Oct. 1, 2014). The First Circuit ruled that constructive knowledge of the application of the tip credit is not enough, but rather employees must have actual notice that tips are to be treated as part of their wages.…

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