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PA Revises Tip Rules for Service Industry

Posted by James W. Creenan | Aug 08, 2022 | 0 Comments

The PA Department of Labor & Industry revised its regulations applicable to the service industry work force.  Here are the five key points:

  • An update to the definition of "tipped employee," adjusted for inflation since 1977, that increases the amount in tips an employee must receive monthly from $30 to $135 before an employer can reduce an employee's hourly pay from $7.25 per hour to as low as $2.83 per hour.
  • Alignment with a recent federal regulatory update governing employer tip credits to allow employers to take a tip credit under certain conditions, including that the employee spends at least 80 percent of their time on duties that directly generate tips, commonly known as the 80/20 rule.
  • Alignment with a recent federal regulatory update to allow for tip pooling among employees but in most cases excluding managers, supervisors, and business owners.
  • A prohibition on employers deducting credit card and other non-cash payment processing transaction fees from an employee's tip left with a credit card or other non-cash method of payment.
  • A requirement for employers to clarify that automatic service charges are not gratuities for tipped employees. 

Here is the DLI's summary:

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James W. Creenan

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