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Tipped Employees in Maine

Filed under Office & HR.

Employers in Maine must conform with these state rules regarding the treatment of tips received by employees.

Maine employers may consider tips as part of the wages of a service employee, but the credit taken by the employer may not exceed 50 percent of the state minimum hourly wage.

An employer that elects to use the tip credit must inform the affected employee in advance and must be able to show that the employee receives at least the minimum hourly wage when direct wages (wages paid directly to the employee by the employer as opposed to money earned in tips) and the tip credit are combined.

If the employee can show that the actual tips received were less than the tip credit, the employer must increase the employee's direct wages by the difference.

A service employee is defined as an employee engaged in an occupation, such as waiters, waitresses, bellhops, counter personnel, and bartenders, in which the employee regularly and customarily receives more than $30 a month in tips.

Tips received are property of the employee and are not to be shared with the employer.

Maine laws on tip pooling cannot be construed as to prohibit an employer from establishing a valid tip pooling arrangement among service employees that is consistent with the federal Fair Labor Standards Act (FLSA).

Tips that are automatically included in the customer's bill must be given to service employees. Tips that are charged to a credit card must be paid to the service employee by the employer by the next regular payday and can not be held while the employer is waiting to be reimbursed by the credit card company.

Effective September 13, 2011, tips do not include a service charge added to a customer's bill in a banquet or private club setting by agreement between the customer and an employer. An employer in a banquet or private club setting that adds a service charge must notify the customer that the charge does not represent a tip for service employees. The employer in a banquet or private club setting may use some or all of any service charge to meet its obligation to compensate employees at the required rate.

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