Tip Credit Rules in Ohio: Tipped Worker Pay Rights

The Fair Labor Standards Act (FLSA), 29 U.S.C. § 203(m), permits employers to use a tip credit against the federal minimum wage of $7.25 per hour. Under the federal law, employers may pay tipped employees as little as $2.13 per hour if their tips make up the difference to reach the federal minimum wage. If tips do not bring the employee to minimum wage, the employer must pay the difference.

The FLSA defines a tipped employee as one who customarily and regularly receives more than $30 per month in tips. Employers using the tip credit must inform employees of the tip credit allowance, the applicable minimum wage, and the fact that tips are the exclusive property of the employee, either orally or in writing.

Tips cannot be used as a credit against overtime compensation—employees must receive overtime at time-and-a-half based on their regular rate of pay, which includes tips. The EEOC and U.S. Department of Labor Wage and Hour Division enforce the FLSA tip credit rules. Employers cannot require employees to share tips with non-tipped staff, though tip pools among tipped employees are permissible.

Ohio Revised Code § 4111.02 establishes Ohio's tip credit framework, which is substantially similar to federal law but with a higher base wage floor. As of 2024, Ohio's minimum wage is $10.45 per hour, and the tip credit is $5.82 per hour—meaning employers can pay tipped employees a base wage of $4.63 per hour ($10.45 minus $5.82) provided tips make up the difference.

Ohio's law is stronger than federal law because it requires a higher total wage floor ($10.45 vs. $7.25 federal). The tip credit amount in Ohio adjusts annually based on the consumer price index, whereas the federal minimum wage of $2.13 has remained static since 1991.

Coverage under Ohio law is broader than federal. Ohio's minimum wage and tip credit rules apply to all employers within the state with no employee count threshold, whereas the FLSA applies primarily to employers with $500,000 or more in annual business volume or those engaged in interstate commerce. This means smaller Ohio employers without significant interstate commerce still must comply with Ohio's tip credit rules.

Ohio law prohibits employers from retaining tips or requiring employees to surrender tips to the employer. Like federal law, tips pooled among tipped employees are permitted, but employers cannot require tipped employees to contribute to pools with non-tipped staff. Ohio law also requires written or oral notification of the tip credit arrangement.

Remedies under Ohio law include back wages, liquidated damages equal to the unpaid wages, and attorney's fees. Private rights of action exist under Ohio's wage laws, allowing employees to sue directly without first filing with an administrative agency, though filing a claim with the Ohio Department of Commerce Division of Labor and Worker Safety is also an option.

Ohio law contains important exceptions to tip credit protections. If an employee does not regularly receive $30 or more per month in tips, the employer cannot claim the tip credit and must pay the full minimum wage of $10.45 per hour. This is a factual determination based on actual tipping patterns, not position title.

Employers cannot claim a tip credit for hours worked in positions that do not customarily involve tipping. For example, if a restaurant employee spends part of their shift cleaning the kitchen or performing duties that do not generate tips, the employer cannot apply the tip credit to those hours. The tip credit applies only to tipped work.

Tips cannot be credited against overtime compensation. Overtime must be calculated based on the full regular rate of pay, including tips, and the overtime rate is time-and-a-half of that rate. An employer cannot reduce the overtime rate by claiming only the $4.63 base wage.

Employers cannot require tip pooling with non-tipped staff. While tipped employees can be required to participate in tip pools among themselves, contribution to pools with cooks, dishwashers, or other non-tipped employees is prohibited and voidsthe tip credit claim for that employer.

Ohio law does not apply to employers subject to certain federal exemptions (e.g., seasonal agricultural operations, certain small family businesses). However, Ohio's standard tip credit rules still govern most service industry employees. Additionally, local municipalities in Ohio may impose higher minimum wage rates, which would supersede the state rate—employees must receive whichever rate is higher.

Step 1: Document Everything. Keep detailed records of all hours worked, tips received (including credit card tips, cash tips, and tip pools), and the base wages paid. Save pay stubs, time records, and receipts or written statements from coworkers confirming tip amounts if your employer does not document tips. Document any conversations with management about the tip credit arrangement, including whether they provided written notice of the tip credit policy at hiring. Take screenshots of posted policies or employee handbooks mentioning tips.

Step 2: File an Internal Complaint. If you believe your employer violated tip credit rules (paying less than the tip credit allows without tips making up the difference, failing to notify you of the tip credit, or improper tip pooling), request a meeting with your manager, HR, or owner in writing. Explain the specific violation—for example, state that you were not paid the minimum wage total of $10.45/hour despite tips, or that you were required to split tips with kitchen staff. Keep a copy of your written complaint and any response. This internal step is not legally required but creates a record and may resolve the issue quickly.

Step 3: File a Wage Claim with the State Agency. Contact the Ohio Department of Commerce Division of Labor and Worker Safety at 614-466-4100 (website: commerce.ohio.gov/documents-and-reports/labor-board). You can file a wage claim online or by mail. Include your name, contact information, employer name and address, dates of employment, specific violations (e.g., "paid $4.63/hour base wage but tips averaged only $2/hour"), documentation of tips earned, pay stubs, and the amount owed. There is no filing deadline explicitly stated in Ohio law, but claims should be filed promptly to preserve evidence. Alternatively, you may file a complaint with the U.S. Department of Labor Wage and Hour Division at 1-866-4-USWAGE or online at dol.gov/agencies/whd if your employer affects interstate commerce.

Step 4: Investigation and Resolution. After filing, the state or federal agency will investigate. The Wage and Hour Division will contact your employer for records of tips claimed and wages paid. The investigation typically takes 30-60 days. The agency will determine whether the employer's records match your claim and whether a tip credit violation occurred. If substantiated, the employer will be ordered to pay back wages plus liquidated damages equal to the unpaid amount. You will receive a determination letter outlining the findings.

Step 5: Consult an Attorney if Needed. If the agency's investigation is incomplete, the employer retaliated against you for filing, or the amount owed is substantial, consult a local employment attorney. Many offer free initial consultations. An attorney specializing in wage and hour law can file a private lawsuit under Ohio Revised Code § 4111.02 and potentially recover attorney's fees and court costs. You do not need to wait for the government agency investigation to conclude before pursuing a private claim.