Arkansas Tip Laws

Under the Fair Labor Standards Act (FLSA), tips are regulated. Employers who meet certain criteria are permitted to take a partial credit against minimum wage obligations for tipped employees. Tipped employees includes those engaged in jobs in which they regularly and customarily receive tips.

The tip credit was created by Congress in 1966, and adjustments occurred on December 28, 2021, when the 2021 Dual Jobs Final Rule went into effect. A federal court vacated portions of the final rule in October 2024, which effectively reinstated the original dual jobs regulation (29 C.F.R.531.56(e). It recognizes that an employee may work in tipped and non-tipped occupations, and employers are only permitted to take the tip credit against minimum wage obligations for hours worked in the tipped occupation.

The FLSA mandates that a tipped worker must be paid at least $2.13 per hour. The FLSA tip credit can be equal to the different between the direct (or cash) wage paid to the employee and the federal minimum wage. Only tips actually received by an employee count when making the determination of a tipped employee and applying the credit.

The FLSA also permits employees to “pool” or share tips with other eligible employees, although it doesn’t impose a limit on the amount or percentage of the contribution of each employee in a valid tip pool.

State law may differ from the federal FLSA standards. Review what tip laws apply in Arkansas.

When Were the Tip Laws Last Updated in Arkansas?

Tip laws in Arkansas were updated in 2021.

Does Arkansas Have Tip Laws That Differ from Federal Tip Laws?

Yes, Arkansas has laws in place that differ from the regulations under the FLSA. Since the state minimum wage is higher than the federal minimum wage, the tip credit amount is higher than what is permitted under the FLSA. Currently, tipped employees may be paid $2.63 per hour with a tip credit of up to $8.37 per hour.

Who Holds the Ownership of Tips in Arkansas?

Under state law, any gratuities paid to employees are their property. Employers are not permitted to keep tips.

What are the Rules for Distribution of Credit Card Processing Tips in Arkansas?

A tip given to an employee must be paid out in the next payroll.

What are the Tip Pooling Rules in Arkansas?

Employers in Arkansas are allowed to establish tip pools, although employees must consent to participate. Employers are required to notify participants in advance and redistribute all tips within the same pay period.

Who Can and Can’t Participate in Tip Pools in Arkansas?

Waitstaff, service employees, and service bartenders are allowed to participate in tip pools. Owners, supervisors, and managers are specifically restricted.

Is there a Difference Between Tips and Service Charges in Arkansas?

Yes, a mandatory service charge is not considered a tip. Therefore, it would belong to the employer.

To be considered a tip instead of a service charge, a customer must give money voluntarily in an amount of their own choosing. The customer must also be able to determine who receives it, and it can’t be set by employer policy.

Can Employers Deduct Credit Card Fees from Tips in Arkansas?

Although some states prohibit the deduction of credit card fees from tips, Arkansas does not have a specific law in place. Employers may make this deduction, although they must make up the difference for any employee whose hourly wage doesn’t reach the state minimum.

Do Tips Count Toward the Minimum Wage in Arkansas?

Yes, the tip credit can count toward minimum wage.

Do Tips Factor Into Regular Rate Calculations for Overtime Pay in Arkansas?

Any eligible employee working over 40 hours in a week should receive overtime pay (1.5 times their normal hourly wage). The tip credit can still apply to these hours.

Are There Cities and Municipalities in Arkansas That Have Their Own Tip and Service Charge Rules That Differ from Statewide Laws?

No, there are currently no cities or municipalities with differing tip or service charge rules.

What Are the Record-Keeping Requirements for Employers Regarding Tips in Arkansas?

Employers must keep detailed records of all tips reported by employees, including amounts and dates of service. If tip pooling is in effect, the record should also include the arrangements and the distribution of tips to eligible staff members.

What Options Do Employees Have for Remuneration if Their Tips are Withheld in Arkansas?

An employee may take legal action against an employer who violates state tip laws.

What are the Penalties for Employers for Not Complying with Arkansas Tip Laws?

Violating Arkansas tip laws can subject an employer to a monetary fine per occurrence, as well as legal charges brought by the employee.

Managing the regulations associated with tips in Arkansas can be a challenge. But with WorkforceHub, your business can ensure accuracy. The numerical clock prompt feature allows the employee to input their received tips at the end of the shift, and that information would be available for reporting and payroll processing. Explore our selection of time clocks to find what works for your business.

Arkansas Department of Labor and Licensing: Min. Wage and OT