Current through Register Vol. 50, No. 9, March 1, 2024
RELATES TO:
KRS
337.275,
337.285,
29 C.F.R.
531.31 -
531.58
NECESSITY, FUNCTION, AND CONFORMITY:
KRS
337.295 authorizes the commissioner to
promulgate administrative regulations permitting allowances as part of the wage
rates applicable under the statutes for board, lodging, gratuities, and other
facilities. This administrative regulation establishes what allowances may be
credited toward the payment of wages as required KRS Chapter 337.
Section 1. Definitions.
(1) "Tip" means a sum presented by a customer
as a gift or gratuity in recognition of some service performed. A tip is
distinguished from a payment of a charge made for the service.
(2) "Tipped employees" is defined by
KRS
337.010(2)(d).
(3) "Wages" is defined by
KRS
337.010(1)(c).
Section 2. Board, Lodging, and
Other Facilities.
(1) In accordance with
KRS
337.275 and
337.285, an employer may be
permitted to include as wages paid to an employee, the reasonable cost of
providing an employee with board, lodging, or other facilities if they are
customarily provided by the employer to employees.
(a) Reasonable cost shall not include a
profit to the employer or to any affiliated person.
(b) This section shall not prohibit payment
of wages in facilities provided either as additions to a stipulated wage or as
items for which deductions from the stipulated wage will be made. The
reasonable cost of board, lodging, or other facilities may be considered as
part of the wage paid an employee only if customarily provided to the employee.
Not only shall the employee receive the benefits of the facility for which the
employee is charged, but acceptance of the facility shall be voluntary and
uncoerced.
(2) The
criteria for board, lodging, or other facilities being customarily provided as
applicable to KRS
337.275 and
337.285 shall be as established
in 29 C.F.R.
531.31.
(3) Other facilities.
(a) The criteria for "other facilities", as
applicable to KRS
337.275 and
337.285, shall be as established
in 29 C.F.R.
531.32(a).
(b) The cost of providing facilities that are
primarily for the benefit or convenience of the employer shall not be
recognized as reasonable and shall not be included in computing wages.
Facilities primarily for the benefit or convenience of the employer shall
include, for example:
1. Tools of the trade
and other materials and services incidental to carrying on the employer's
business;
2. The cost of any
construction by or for the employer; and
3. The cost of uniforms and of their
laundering, if the nature of the business requires the employees to wear a
uniform.
(4)
The prohibition of kickbacks, as applicable to
KRS
337.275 and
337.285, shall be as established
in 29 C.F.R.
531.35.
(5) The criteria for payment if additions or
deductions are involved in nonovertime workweeks, as applicable to
KRS
337.375 and
337.285, shall be as established
in 29 C.F.R.
531.36(a).
(6) Overtime workweeks.
(a) Pursuant to
KRS
337.285, an employee shall receive
compensation for overtime hours at a rate of not less than one and one-half (1
1/2) times the rate at which the employee is employed. If overtime is worked by
an employee who receives the whole or part of his or her wage in facilities and
it becomes necessary to determine the portion of wages represented by
facilities, all of the facilities shall be measured by the requirements of this
administrative regulation.
(b)
Deductions may be made on the same basis in an overtime workweek as in
non-overtime workweeks, if their purpose and effect are not to evade the
overtime requirements of
KRS
337.285.
1.
The amount deducted shall not exceed the amount that could be deducted if the
employee had only worked the maximum number of straight-time hours during the
workweek.
2. Deductions in excess
of this amount for the items shall be prohibited in overtime workweeks as well
as in non-overtime workweeks.
3.
There shall not be a limit on the amount that may be deducted for board,
lodging, or other facilities in overtime workweeks if these deductions are made
only for the reasonable cost of the items provided.
(c) If deductions are made from the
stipulated wage of an employee, the regular rate of pay shall be based on the
stipulated wage before any deductions have been made. If board, lodging, or
other facilities are customarily provided as addition to a cash wage, the
reasonable cost of the facilities to the employer shall be considered as part
of the employee's regular rate of pay.
Section 3. Payment Made to Person Other than
Employee.
(1) Amounts deducted for taxes.
Taxes assessed against the employee and collected by the employer and forwarded
to the appropriate governmental agency shall be included as wages. This
principle shall be applicable to the employee's share of Social Security, as
well as other federal, state, or local taxes. A deduction shall not be made for
any tax or share of a tax that the law requires to be borne by the
employer.
(2) The criteria for
payments to third persons pursuant to a court order, as applicable to
KRS
337.275 and
337.285, shall be as established
in 29 C.F.R.
531.39(a).
(3) The criteria for payments to an
employee's assignee, as applicable to
KRS
337.275 and
337.285, shall be as established
in 29 C.F.R.
531.40.
Section 4. Payment of Wages to Tipped
Employees.
(1) Conditions for taking tip
credits in making wage payments.
(a) The wage
credit permitted on account of tips under
KRS
337.275(2) shall be taken
only with respect to wage payments made under KRS Chapter 337 to those
employees whose occupations in the workweeks for which the payments are made
are those of "tipped employees."
(b) To determine if a tip credit may be taken
in paying wages to a particular employee, it is necessary to know:
1. What payments constitute tips;
2. If the employee receives more than thirty
(30) dollars a month in payments in the occupation in which the employee is
engaged; and
3. If in the
occupation the employee receives these payments in that amount customarily and
regularly.
(2) General characteristics of tips.
(a) To qualify as a tip, the customer shall
determine:
1. If a tip is given;
2. The amount of the tip; and
3. Who shall be the recipient of the
tip.
(b) Only tips
actually received by an employee as money belonging to the employee, which are
used as the employee chooses free of any control by the employer, shall be
counted in determining if the employee is a tipped employee within the meaning
of the KRS Chapter 337 and in applying the provisions of
KRS
337.275(2).
(3) The following shall not be
considered tips:
(a) Criteria established in
29 C.F.R.
531.55(a);
(b) If the employment agreement includes that
amounts presented by customers as tips belong to the employer and shall be
credited or turned over to the employer, the employee is in effect collecting
for his or her employer additional income from the operations of the employer's
establishment. Even though the amounts are not collected by imposition of any
compulsory charge on the customer, the employee is not receiving tips within
the meaning of KRS Chapter 337.
(4) More than thirty (30) dollars a month in
tips. If an employee employed is not a tipped employee, the employee shall
receive the full compensation required by KRS Chapter 337 in cash or allowable
facilities without any credit for tips received.
(a) Pursuant to
KRS
337.010(2)(d), tipped
employee does not require that the calendar month be used in determining if
more than thirty (30) dollars a month is customarily and regularly received as
tips. A recurring monthly period beginning on the same day of the calendar
month may be used.
(b) The fact
that an employee is part of a group that has a record of receiving more than
thirty (30) dollars a month in tips shall not qualify the employee as a tipped
employee.
(5) The
criteria for "customarily and regularly", as applicable to
KRS
337.010(2)(d), shall be as
established in 29 C.F.R.
531.57.
(6) Criteria for the exception of initial and
terminal months of employment from the requirement that a tipped employee
receive more than thirty (30) dollars a month in tips shall be as established
in 29 C.F.R.
531.58.
(7) The tip wage credit. In determining
compliance with the wage payment requirements of
KRS
337.275(2), the amount paid
to a tipped employee by an employer shall be deemed to be increased on account
of tips by an amount equal to the formula established in
KRS
337.275(2) if the employer
satisfies all the requirements in the workweek for which the wage payment is
made.
(a) This credit shall be in addition to
any credit for board, lodging, or other facilities that may be allowable under
this administrative regulation. The actual amount shall be left by
KRS
337.275(2) to determination
by the employer on the basis of the employer's information taken from his or
her records concerning the tipping practices and receipts in the establishment.
In order for an employer to take the maximum credit allowed by this special
provision, the tipped employee shall receive the maximum in actual
tips.
(b) If the employee is
receiving less than the amount credited, the employer shall be required to pay
the balance so that the employee receives at least the minimum wage with the
combination of wages and tips.
1. The tip
credit shall be taken only for hours worked by the employee in an occupation in
which the employee qualifies as a tipped employee.
2. An employer shall not use any part of an
employee's tips to pay the minimum wage to any employee; but may only apply
credit toward the payment of the minimum wage to the employee who actually
received the tip.
3. Under
employment agreements requiring tips to be turned over or credited to the
employer to be treated as part of the employer's gross receipts, the employer
shall pay the employee the full minimum hourly wage.
(8) Overtime payments. If overtime
is worked by a tipped employee who is subject to the overtime pay provisions of
KRS
337.285, the regular rate of pay shall be
determined by dividing the employee's total remuneration for employment in any
workweek by the total number of hours actually worked in that workweek for
which the compensation was paid. A tipped employee's regular rate of pay
includes the amount of tip credit taken by the employer (not in excess of the
formula established in
KRS
337.275(2)), the reasonable
cost of any facilities provided the employee by the employer, and the cash
wages including commissions and bonuses paid by the employer. Any tips received
by the employee in excess of the tip credit need not be included in the regular
rate. The tips shall not constitute payments made by the employer to the
employee as remuneration for employment.
(9) Tip pooling. Pursuant to
KRS
337.275(2), employees may
enter into an agreement to divide tips among themselves. If employees enter
into this type of agreement, the amounts retained by the employees shall be
considered tips of the individuals who retain them.
Section 5. Records. If an employer uses the
reasonable cost of providing an employee with board, lodging, or other
facilities in meeting the requirements of
KRS
337.275 and
337.285, it shall be necessary
to keep the following records, in addition to those required by
KRS
337.320:
(1)
The facility being provided by the employer to the employee; and
(2) The cost being charged for the facility
by the employer.
STATUTORY AUTHORITY:
KRS
337.295