April 2024

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Maine Amends Tip Pooling Rules

09/07/23

Author: ADP Admin/Tuesday, September 5, 2023/Categories: Compliance Corner , State Compliance Update, Maine

Maine has enacted legislation that will allow employees who don’t customarily and regularly receive tips to participate in tip pooling, provided the employer pays the full minimum wage and doesn’t use the tip credit. The change will take effect Oct. 25, 2023.

The details

Background

Under state law, employers may take a "tip credit" against their minimum wage obligations for employees who customarily and regularly receive more than $175 a month in tips (that is, service employees). A tip credit is permitted as long as the service employee receives at least the minimum wage per hour when their tip credit is combined with tips received. For 2023, the maximum tip credit is $6.90 per hour under state law.

Tip pooling is an arrangement among employees to share a portion of their tips received with others in the pool. State law allows employers to institute mandatory tip pooling among service employees, provided it doesn’t violate federal and state law.

New Law

Once the new law takes effect, mandatory tip pooling between service and non-service employees will be allowed if the employer pays service employees (and non-service employees) at least the full minimum wage ($13.80 in 2023) in direct cash wages and doesn't take the tip credit. The employer, managers and supervisors are prohibited from receiving tips from such a tip pool.

Note: If employers take the tip credit, mandatory tip pooling with non-service employees is still prohibited by state law (as well as federal law).

Next steps

  • If you intend to allow tip pooling between service and non-service employees:

Please contact your ADP® Service Representative if you have any questions.

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