FLSA Notice of Tip Credit

[Employee Name],

As allowed by the Fair Labor Standards Act, [Company Name] is utilizing the tip credit provision outlined in the Act. Under this provision, you will be paid a base hourly rate of ________ [currently, not less than $7.25 per hour]. [Company Name] will claim a tip credit of [currently, $5.12/hour]_____ per hour [tip credit is the difference between the minimum wage (currently $7.25/hour) and the minimum cash wage (currently $2.13/hour) which is the maximum allowed by federal law].

Under the Act, we are required to notify you of our intention to utilize the tip credit. This memo serves as that notification. You also should know that the additional amount claimed by [Company Name] on account of tips as the tip credit may not exceed the value of the tips received by you.

In addition, all tips received by you must be retained by you. The only exception to this is tip pooling arrangements, which are reserved for employees who customarily and regularly receive tips. [Company Name] [does/does not] have a mandatory tip pool, and employees who regularly and customarily receive tips are required to contribute _____% of their tips into the pool.

Finally, you should be aware that the IRS requires employees to report all of their tips as taxable income on annual tax returns.

Please sign below as the acknowledgment that you have read this notice and understand its contents.

Employee signature:___________________________ Date:______________________