Oregon 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 Oregon.

When Were the Tip Laws Last Updated in Oregon?

Tip laws in Illinois were updated in December 2020.

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

Yes, Oregon has laws in place that differ from the regulations under the FLSA. It is not permitted to take a tip credit on any tipped employee to reach the hourly minimum wage.

Who Holds the Ownership of Tips in Oregon?

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 Oregon?

A tip given to an employee via credit card must be paid out on the next regular payday.

What are the Tip Pooling Rules in Oregon?

Employers in Oregon are allowed to establish mandatory tip pools. Eligible employees share a portion of their tips, which are distributed among the group. The law mandates that no additional requirements must be in place for employees to contribute beyond what is fair or reasonable.

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

Tipped employees are allowed to participate in tip pools. Supervisors, owners, and managers are not permitted to participate, nor are workers who do not normally get their own tips, such as chefs or dishwashers.

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

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 Oregon?

There is no law in effect that specifically addresses whether a credit card fee may be deducted from a tipped employee’s tips.

Do Tips Count Toward the Minimum Wage in Oregon?

No, employers may not use tips to count toward the minimum hourly wage in Oregon.

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

Any eligible employee working over 40 hours in a week should receive overtime pay (1.5 times their normal hourly wage). Tips do not factor in, as tip credits are not permitted in Oregon.

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

The key difference between specific cities and municipalities in Oregon is the hourly wage. Any employee working in a city with a higher wage than the state rate must earn at least that much per hour.

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

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 Oregon?

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

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

Violating Oregon tip laws can subject an employer to a fine, tax consequences, and the risk of litigation.

Managing the regulations associated with tips in Oregon 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.

BOLI: OR Minimum Wage