Alaska Prohibits Employers from Mandating Tip Sharing
08/01/18
Author: ADP Admin/Friday, July 27, 2018/Categories: State Compliance Update, Alaska
Overview: Alaska issued amended regulations prohibiting employers from redistributing employees’ tips among other workers. The regulations also clarify who is considered a tipped employee.
Effective Date: June 29, 2018
Details:
Alaska Employee Tips Regulations
Effective June 29, 2018, the Alaska employee tips regulation prohibits employers from handling an employee’s tips except when delivering the tip to the employee when a customer uses a credit card or redistributing tips to employees under a tip pooling arrangement.
The amended regulation also requires that if redistributing tips to tipped employees under a tip pooling arrangement:
- employers must provide written notice to all tipped employees of the tip pooling arrangement;
- any changes to a tip pooling arrangement must be provided in writing on the payday before the payday on which the change becomes effective; and
- a tip pooling arrangement may not be retroactive.
Further, the amended regulation defines “tipped employee” as an employee engaged in an occupation in which the employee customarily and regularly receives more than $30 a month in tips; the definition does not include an employee whose primary duty is not direct customer service. Accordingly, employers may not include non-tipped or “back of the house” employees (i.e. cooks or dishwashers) in tip pools.
The Alaska regulation does not prohibit the voluntary sharing of tips by employees.
Action Required: Alaska employers should ensure compliance with the new law. Employers should:
- Provide written notice of any tip pooling arrangement to all tipped employees.
- Not include non-tipped employees in tip pools and remove them if they are currently included.
- Ensure that all non-tipped employees are paid the Alaskan minimum wage.
- Review and revise, if necessary, policies and procedures concerning tipped employees.
- Train employees on the amended requirements.
Please be sure to contact your Payroll Service Representative or Human Resources Business Partner if you have any questions.
This content provides practical information concerning the subject matter covered and is provided with the understanding that ADP is not rendering legal advice.
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