Event check
Results
Guest pays: $13800.00
Service charge (not tip): $2000.00
Voluntary tip: $1800.00
Per person service charge: $200.00
Per person tip: $180.00 — tip pool
Federal tips vs service charges: DOL Fact Sheet #15 · 29 CFR 531.52(a). A compulsory charge for service, for example, 15 percent of the bill, is not considered a tip under the FLSA. Sums distributed to employees from service charges are not tips, but may be used to satisfy the employer's minimum wage and overtime pay obligations under the FLSA. Further, these sums are part of the employee's total compensation and must be included in the regular rate of pay for computing overtime. Under 29 CFR 531.52(a), A tip is a sum presented by a customer as a gift or gratuity in recognition of some service performed for the customer. It is to be distinguished from payment of a charge, if any, made for the service. Whether a tip is to be given, and its amount, are matters determined solely by the customer. Sources fetched 11 Nov 2026. Not legal advice.
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FAQ
- Is a banquet service charge a tip under federal law?
- DOL Fact Sheet #15 states that a compulsory charge for service is not considered a tip under the FLSA. Amounts distributed from service charges are wages, not tips, and count in the regular rate for overtime.
- Can we use service charge money for tip credit?
- Service charge distributions are not tips. Only tips actually received by employees count toward tipped-employee status and tip credit under 29 CFR 531.52(a) and Fact Sheet #15.
- How do I split voluntary tips among banquet staff?
- This tool shows equal per-person voluntary tip amounts for headcount you enter. For hours- or points-weighted pools, use the tip pool calculator after you know the tip total.
How this calculator works
Banquet contracts often include a mandatory service charge plus optional guest gratuity. Federal rules treat those amounts differently for tips, tip credit, and overtime regular rate.
A compulsory charge for service, for example, 15 percent of the bill, is not considered a tip under the FLSA. (Fact Sheet #15). Sums distributed to employees from service charges are not tips, but may be used to satisfy the employer's minimum wage and overtime pay obligations under the FLSA. Further, these sums are part of the employee's total compensation and must be included in the regular rate of pay for computing overtime.
A tip is a sum presented by a customer as a gift or gratuity in recognition of some service performed for the customer. It is to be distinguished from payment of a charge, if any, made for the service. Whether a tip is to be given, and its amount, are matters determined solely by the customer. (29 CFR 531.52(a)).
| Input or result | Example |
|---|---|
| Guest total | $13,800.00 |
| Service charge per person | $200.00 |
| Voluntary tip per person | $180.00 |
People also ask
- What is the difference between a service charge and a tip?
- Under DOL Fact Sheet #15, a compulsory service charge is not a tip. Voluntary amounts the guest chooses are tips under 29 CFR 531.52(a).
- Does service charge count toward overtime?
- DOL Fact Sheet #15 states that sums distributed from service charges are part of total compensation and must be included in the regular rate when computing overtime.
- Can managers take banquet service charges?
- Service charge distributions are wages, not tips. Tip rules such as 29 CFR 531.54 govern pooled tips; confirm who may receive service-charge payouts under your policy and applicable law.
Totals shown here are estimates for checking a pay stub or time sheet. They are not official payroll, tax, or legal advice.