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New Hampshire Clarifies Tip Sharing and Pooling

09/07/23

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

New Hampshire has enacted legislation (Senate Bill 269), which clarifies the circumstances in which an employer may administer a tip pool or tip-sharing agreement. Senate Bill 269 takes effect on Sept.  26, 2023.

The details

As background, under New Hampshire law, a "tip" means money:

  • Given to an employee by a customer, in cash or its equivalent; or
  • Transferred to the employee by the employer pursuant to directions from a credit card customer who designates a sum to be added to the bill. The sum may be a tip or added as a gratuity (or service charge) to a customer's bill in recognition of the service performed.

Senate Bill 269

The law removes “service charge" from the definition of "tip" and clarifies the following information on tip pools and tip-sharing agreements:

Employee Protections

Senate Bill 269 clarifies that:

  • Tips are wages that are the property of the employee receiving the tip;
  • An employee retains their tips unless they voluntarily, and without coercion from the employer, agree to participate in a tip pooling or tip sharing arrangement; and
  • An employee that participates in a tip pool may agree (if the agreement is voluntary and free from employer coercion) to give a portion of the common tip pool to other employees (regardless of job category) that participated in providing service to customers.

Employer Tip Pool and Tip Agreement Administration

Under the law, employers may administer a valid tip-pooling or tip sharing arrangement. This includes the following actions:

  • Suggesting reasonable and customary practices;
  • Documenting agreed upon practice; and
  • Mediating disputes between employees (provided the employer does not require or coerce employees to participate in the tip pooling or tip sharing arrangement).

Next steps

Employers should review their pay policies and practices and train supervisors to help ensure compliance with Senate Bill 269 by Sept.  26, 2023

 

Please contact your ADP® Service Representative with any questions.

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