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Maryland provides guidance on Tip Credit Wage Statement requirement

12/3/20

Author: ADP Admin/Tuesday, December 1, 2020/Categories: Compliance Corner , State Compliance Update, Maryland

The Maryland Department of Labor (MDOL) has provided guidance on a new requirement for restaurant employers to provide a tip credit wage statement to tipped employees.

Background:

In 2019, Maryland enacted legislation (Senate Bill 280) to, among other things, direct the MDOL to adopt regulations that require restaurants that apply the tip credit toward the minimum wage to provide tipped employees with a wage statement each pay period that shows the effective hourly tip rate. The regulations, which took effect October 1, 2020, define key terms and state:

  • No later than two weeks following the end of the pay period, a restaurant employer must provide each employee for whom the employer uses a tip credit with a wage statement for each pay period that reflects all reported tips for tip credit hours for each workweek of the pay period.
  • The employer may satisfy the requirement by providing an online system through which an employee may obtain the employee's tip credit wage statement.

New Guidance:

The MDOL has published new guidance in the form of answers to frequently asked questions. Some examples include:

Q: Does the tip credit wage statement need to be provided at the same time as the pay stub?

A: No. The tip credit wage statement does not need to be provided at the same time as the pay stub but it must be provided no later than two weeks following the end of the pay period.

Q: Can the tip credit wage statement be provided electronically?

A: Yes. The tip credit wage statement can be electronic or written.

Q: What additional information must employers provide along with the effective hourly tip rate of pay on tip credit wage statements?

A: Yes. However, because of the requirement to provide this information for each workweek of the pay period, employers will need to break down payroll information for tip credit employees by workweek when reporting pay period information to payroll service providers if the employer wants the payroll service to include this information with employee pay stubs/statements.

Q: How long does the tip credit wage statement need to be retained? Does this need to be retained with the employees' payroll records?

A: Like other payroll records, the tip credit wage statement should be retained for at least three years.

The full guidance can be found here.

Compliance Recommendations:

Restaurant employers in Maryland that claim the tip credit should review the regulations and guidance in full and ensure compliance. Please contact your dedicated service professional with any questions.

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Tags: 12/3/20

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