What are the laws governing wages and tips for tipped employees?
In Maryland, laws governing wages and tips for tipped employees are outlined in the Maryland Wage and Hour Law. The law states that employees who receive tips as part of their wages must be paid at least the Maryland minimum wage. For the year 2021, that is $11.75 per hour. Tipped employees must receive tips that are at least equal to the difference between their hourly wages and the Maryland minimum wage. For example, if an employer pays a tipped employee $5 per hour, the employee must receive at least $6.75 in tips each hour so that their total hourly pay is equal to the Maryland minimum wage. Tipped employees are also protected from having their tips taken by their employer or any other employees. Employers cannot require employees to share a portion of their tips with them, and they cannot take a portion of tips for themselves. Tips are the property of the employee and in most cases, should not be considered part of an employee’s wages. However, if tips are combined with other forms of payment, like commission, to make up the Maryland minimum wage, the employer must pay the employee appropriately. Employers are also required to inform tipped employees of their rights under Maryland law. They must provide documentation of the amount of tips they have received, and they must report any tips received to the IRS.
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