Nebraska 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 Nebraska.

When Were the Tip Laws Last Updated in Nebraska?

The tip laws were updated in Nebraska in January of 2024.

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

Yes, Nebraska has tip laws that differ from federal laws. Employers may take a tip credit, but Nebraska also has a higher statewide minimum wage than the federal rate, so employers must ensure that tipped employees receive enough tips to reach the current level. Additionally, any hours spent on tasks unrelated to tipped duties must be paid at the full hourly rate.

Who Holds the Ownership of Tips in Nebraska?

Under federal law, any gratuities paid to employees are their property. Employers are not permitted to require employees to hand in their tips, although they are allowed to count the tip toward the hourly rate.

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

Federal law states that all tips paid by credit card must be issued to employees no later than the next regular payday, even if the employer is awaiting reimbursement from the financial provider.

What are the Tip Pooling Rules in Nebraska?

Employers are permitted to establish mandatory pools, but if they take a tip credit, the pool may only include tipped employees. They are also require to redistribute the tips in the pool within the same pay period.

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

Tipped employees can participate if the employer takes a tip credit. Non-tipped employees, like cooks and dishwashers, may participate in the employer pays the full hourly minimum wage. Supervisors, managers, and owners are not allowed to participate.

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

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 Nebraska?

The law regarding the deduction of credit card fees from tips is unclear. Currently, employers may be able to do so.

Do Tips Count Toward the Minimum Wage in Nebraska?

Yes, tips can count toward the minimum wage for tipped employees working in Nebraska.

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

No, tips don’t factor into rate calculations for OT pay. Any eligible employee working over 40 hours in a week should receive overtime pay (1.5 times their normal hourly wage).

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

No, there are no cities or municipalities with differing laws.

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

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 Nebraska?

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

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

Violating Maine tip laws can subject an employer to fines, legal fees, and potential legal action taken by employees impacted by the issue. The severity of penalties will often increase with repeat or willful violations.

Managing the regulations associated with tips in Nebraska 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.

Nebraska Department of Labor FAQ