Please note: We are not a legal firm and do not provide legal advice. This article is for informational purposes only. Consult with a qualified attorney before implementing any practices discussed herein.
Mississippi restaurant owners must ensure that tipped employees are paid fairly to ensure the business remains legal and compliant. From questions like "Can owners take tips?" and "What is a service charge?", this short guide has everything you need to know about tipping in Mississippi.
The current federal minimum wage is $7.25 per hour, so all Mississippi businesses must ensure that their employees receive at least that compensation. However, for tipped employees, the company owner can use what's known as a tip credit to make up a portion of this minimum wage.
Note: Mississippi does not have its own state minimum wage, which is why all amounts refer to the federal minimum wage.
A tip credit means that a restaurant owner can use some of the tips received by an employee to ensure they get at least the minimum wage. There are some conditions to this:
In Mississippi, tip credits aren't enforceable if the employer hasn't made their workforce aware of tip credit rules.
If an employee does mixed work or "dual jobs," such as some waiting tables and some kitchen cleaning duties, employers can still use tip credits as long as the untipped work contributes to the tipped work in some way. For example, a server cleaning the kitchen helps get meals to customers. However, if the restaurant owner asked the employee to spend half their shift dropping off the manager's dry cleaning, that would not count as tipped work and tip credits wouldn't apply.
In all instances, the restaurant must carefully record all tip credits and be able to show on their accounts that every worker has received at least the minimum wage.
Tip pooling is when all tipped employees pay the tips they receive into a central pot. The restaurant manager then divides them among the workers.
This is a popular practice in restaurants where some tipped workers receive significantly more tips than others. For example, a bartender may work tirelessly but only receive the odd dollar here and there, while an employee waiting tables could serve three large parties and end up with $50 or more in a much shorter space of time. Tip pooling helps ensure everyone sees the benefit of diners' and guests' generosity.
Mississippi tip pooling laws state:
Managers or accountants must ensure that careful records of tip pools are kept at all times. Tipping software can help with this, particularly as it allows restaurants (and other businesses that have tipped employees) to arrange automatic digital payouts.
Mississippi restaurant managers are allowed to mandate a tip pool as long as all tipped employees are made aware of this.
Employees can also arrange tip sharing, where they voluntarily contribute a portion of their tips to other members of staff. While managers don't have to oversee all the details of this, they must at least ensure employees aren't inadvertently taking themselves below the minimum wage by relinquishing their tips.
Related reading: Tip Pooling vs. Tip Sharing: Which is Right for Your Restaurant?
Unlike a tip, which is given voluntarily by the guest, a mandatory service charge is applied to the bill for additional services, such as handling a large party or providing special catering.
Employees have no rights to any percentage of a service charge, although Mississippi restaurant owners can opt to share these fees with the workforce. Mississippi law doesn't state that restaurants should clearly show whether the charge goes to the restaurant or the employee. However, it makes good business sense to do this because diners may feel more inclined to tip when they realize employees aren't entitled to service charges.
Restaurants that allow diners to pay by card are liable for any card processing fees the payment provider enforces. Owners may think they can recover these fees by deducting them from an employee's tips.
While there is no law that specifically prohibits this in Mississippi, the law does state that, apart from tip credits and any tipping pool, all tips received by an employee belong to them. Restaurant owners should respect this law to avoid running into legal difficulties.
It's critical that restaurant owners know how to protect their tipped workers' rights. Mississippi restaurants that demonstrate that they allow workers to keep their earned tips and have fair-tipping pools will attract better staff members and gain a preferential reputation.
There's more information on tipping laws at the U.S. Department of Labor (DoL) site. Your tipping software should help you handle the complexities of tipping in Mississippi while offering conveniences like digital payouts. To find out how this could improve your business, start your free trial today!
