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Maine Restores Tip Credit for Service Employees

7/20/17

Author: Taneil Jaeger/Wednesday, July 19, 2017/Categories: Maine

Maine employers can once again consider tips part of the wages of service employees.

Governor Paul LePage recently signed Senate Bill 235, titled An Act to Restore the Tip Credit to Maine’s Minimum Wage Law (“Act”).  Beginning January 1, 2018, employers will be able to pay “service employees” a direct wage of no less than 50% of the state’s minimum wage and take a tip credit of up to 50% of the minimum hourly wage. Under current law, which is effective through December 31, 2017, employers must pay service employees a minimum direct wage of no less than $5.00 per hour.

Employers who elect to use the tip credit must notify employees in advance. For more information on the notice requirements click here. Employers must also be able to show that the employees receive at least the minimum hourly wage when the cash wages and the tip credit are combined within the established 7-day workweek.

The new law partially repeals the November 2016 ballot measure that increased Maine’s minimum wage to $12 per hour by 2020. However, the current state minimum wage of $9.00 per hour will increase to $10 per hour on January 1.

Coverage:  Employers with “service employees” who work in Maine.

Effective:   January 1, 2018

Action Required:  You should contact your Payroll Service Representative or your Human Resource Business Partner if you have any questions.

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