CHOP Manager Knowledge Base

How Does the Tipped Employee Rule Work in Action?

  1. 1

    Team Members who are barbers and stylists are guaranteed minimum wage pursuant to the tipped employee rules of their state.

  2. 2

    Tipped employees are generally defined as anyone who earns an average of $30 or more monthly in tips.

  3. 3

    Since CHOP is authorized by the State, We take a tip credit towards the barber's/stylist's minimum wage requirement.

  4. 4

    CHOP is required to pay all Team Members minimum wage and we do this every time payroll is run using that rate in all payroll hourly calculations.

    • The tip credit cannot exceed the amount actually earned by the Team Member.
    • If the Team Member does not make minimum wage through combined earnings, We must default to the minimum wage rate and guarantee that amount.
    • For tipped employees who do not make minimum wage, they will see a zero in the commission column of their paystub denoting We did not use the commission but defaulted to the minimum wage and utilized the tip credit.
  5. 5

    The tipped employee credit does not change the fact that all tips received by the Team Member are theirs to keep. The credit just allows CHOP to use the tipped amount in the minimum wage calculation.

  6. 6

    End