Ohio 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 Ohio.

When Were the Tip Laws Last Updated in Ohio?

The tip laws were updated in Ohio in April of 2021 in alignment with changes to the federal laws.

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

Yes, Ohio has tip laws that differ slightly from federal laws. Employers are permitted to take a tip credit of up to 50% of the minimum wage, which currently aligns with the federal hourly rate. A tipped employee must earn at least $30 per month in tips, and the employer must provide advance notice about taking the tip credit.

Who Holds the Ownership of Tips in Ohio?

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 Ohio?

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 Ohio?

Mandatory tip pools are allowed in Ohio. However, any employer who takes the tip credit must only include tipped employees in the pool.

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

Only tipped employees may participate. Supervisors, managers, owners, and non-tipped employees may not.

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

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 Ohio?

Yes, employers may deduct credit card fees from tips as long as doing so doesn’t take the hourly wage below the minimum.

Do Tips Count Toward the Minimum Wage in Ohio?

Yes, tips may count toward the minimum wage in Ohio as long as the employer adheres to the required tip credit vs. cash wage percentage.

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

No, tips do not 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 Ohio 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 Ohio?

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 Ohio?

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

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

Violating Ohio tip laws can subject an employer to a fine of up to $1,162 per violation. Employees may also be permitted to recover the unpaid wages in damages.

Managing the regulations associated with tips in Ohio 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.