December 2021

State Updates

 

Maine narrows who qualifies for tip credit

10/07/21

Author: ADP Admin/Sunday, October 3, 2021/Categories: Compliance Corner , State Compliance Update, Maine

Maine has enacted legislation (Legislative Document 1489) that will increase the amount in tips that an employee must receive to be considered a service employee that qualifies for the tip credit under state law.

Background:

Maine allows employers to apply a tip credit toward the minimum wage for service employees who regularly receive a certain amount in tips per month (currently $30). For employees who qualify, the minimum direct cash wage is 50 percent of the general minimum wage and a tip credit for tips received can be applied for the remaining amount. If the employee’s direct cash wages and tips don’t equal or exceed the state’s general minimum wage, the employer must make up the difference.

Legislative Document 1489:

Legislative Document 1489 increases the amount in tips that an employee must receive regularly to be considered a service employee and therefore qualify for the tip credit, as follows:

·      $100 per month in tips beginning January 1, 2022; and

·      $175 per month in tips beginning January 1, 2023.

In subsequent years, the amount will be adjusted for inflation.

Compliance Recommendations:

Before applying a tip credit, Maine employers should ensure that the employee regularly receives at least $100 per month in tips in 2022 and $175 per month in tips in 2023. In 2024 and each year thereafter, employers should ensure the employee regularly receives at least the inflation-adjusted amount in tips per month. Please contact your dedicated service professional with any questions.

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Tags: 10/07/21

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