August 11, 2023
Title image with "Understanding New Hampshire Tip Laws: A Comprehensive Guide for Employers" and photo of a waitress serving a customer a pastry

Do you operate a hospitality business in New Hampshire, or are you planning to launch one? Either way, it’s vital to ensure you understand New Hampshire tip laws.

New Hampshire has its own minimum wage and tip credit amount. Plus, hospitality industry employers in the Granite State must be careful to avoid coercion by requiring employees to participate in a tip pool. 

Keep reading for New Hampshire’s basic tip rules, tip credit explained, minimum wage requirements, tip pooling rules, and the treatment of mandatory service and credit card charges.

Basic New Hampshire Tip Laws

New Hampshire wage and hour laws consider tips the property of the employees who receive them. Employers are prohibited from keeping or distributing any portion of the tips received by their employees except:

  • In the case of a tip credit, when the employer counts all or part of the employee’s tips to meet minimum wage requirements.
  • As part of a valid tip pooling arrangement, when employees share and divide their tips. In New Hampshire, employees must opt into a tip pool—they cannot be required to participate.

More on both of these below!

Understanding Tip Credits & Minimum Wage Requirements

A “tip credit” is a provision that allows employers to pay employees in tipped positions less than the regular minimum wage as long as the employee’s tips bring their total compensation up to or above the minimum wage. Federal law and most state laws allow a tip credit—but only if you make more than $30 in tips each month.

New Hampshire’s minimum wage is $7.25 per hour for non-tipped employees, the same as the federal minimum wage. For tipped employees, the minimum wage (i.e., server’s wage) is $3.26 per hour, meaning the employer may take a tip credit of up to $3.99. The employer must make up the difference if an employee’s tips fall short of $7.25 an hour.

Employers can only pay employees this server’s wage if the employees:

  • Work for a restaurant (including those who deliver prepared food), hotel, motel, inn, or cabin, and
  • Regularly receive $30 a month in tips directly from customers

New Hampshire’s Strict Tip Pooling Rules

Tip pooling or sharing is when a group of employees pool their tips and redistribute them according to a predetermined formula. Under New Hampshire tip laws, employers cannot require or coerce employees to share or pool their tips.

Let’s look at a few key terms as defined by the New Hampshire Department of Labor:

  • Coercion: The threat of or a direct action which results in an adverse effect on an employee’s economic or employment status
  • Tip pooling: Tips from employees within the same job category are intermingled in a common pool and then redistributed among participating employees.
  • Tip sharing: Tipped employees give a portion of their tips to other workers who participated in providing service to customers.

Simply put, your employees should not fear retaliation if they don’t agree to a tip pool.

Employers may set up a tip pooling or sharing system if employees request it. They can also guide staff on the tip pool arrangement and mediate employee disputes about the pool. Owners and managers are not allowed to participate in the tip pool.

What is Considered a Tip?

Tips are voluntary, gratuity-based payments given by customers to service industry workers in recognition of good service. They are considered the property of the employees who directly receive them. Whether in cash or included in credit card payments, tips are additional payments that customers choose to provide on top of the actual cost of goods or services rendered.

Employees must be allowed to retain the full amount of tips they receive, with no portion going to the employer, except when participating in a valid tip pooling arrangement (as mentioned earlier).

Now, let’s break down the exceptions of mandatory service charges and credit card fees.

Mandatory Service Charges

Mandatory service charges are different from tips. These charges are predetermined and automatically added to the bill for large parties or special events. Unlike tips, mandatory service charges are not discretionary or voluntary payments made by customers based on the quality of service received.

Under New Hampshire law, mandatory service charges are not considered tips. Instead, they are regarded as revenue for the employer. As such, these charges must be paid to employees within their hourly wages, subject to income tax withholding and other employment taxes.

Employers must communicate to employees and customers that mandatory service charges are not tips to ensure transparency and avoid confusion.

Credit Card Charges

When it comes to tips via credit card and whether employees are entitled to the full tip amount, the rules vary by state. Some states allow employers to pass on a portion of the credit card processing fee to employees. Others, like Massachusetts, prohibit this, stating that processing fees are a cost of doing business.

New Hampshire tip laws do not explicitly address the matter of credit card tips.

Tipping Legally in New Hampshire

Hospitality employers must understand and comply with New Hampshire tip laws to ensure employees receive proper compensation. Coercing tipped staff into sharing or pooling their tips can lead to significant fines and damage your reputation. 

When you understand the basic tip rules, tip credit, minimum wage requirements, tip pooling regulations, and the state’s definition of coercion, you’ll maintain a fair and compliant workplace.

Do you need guidance on your New Hampshire company’s tipping practices and policies? Our HR consultants are ready to lead the way! Contact BlueLion today at 603-818-4131 or to learn more about our outsourced HR services.

The information on this website, including its newsletters, is not, nor is it intended to be legal advice. You should contact an attorney or HR specialist for advice on your individual situation.