Kansas Tip Laws for Employers: Your Guide to Local Tip Policy and Fair Pay

 

Kansas tip laws are pretty straightforward. The state follows federal standards for all tip regulations, including tip definitions, ownership, tipped worker criteria, tip credits, and tip pooling. If you want to foster healthy relationships with your staff, avoid legal penalties, and maintain smooth operations, developing a strong understanding of these laws is crucial.

What is a “tip” in Kansas?

Under the Fair Labor Standards Act (FLSA), a tip is a voluntary payment a customer gives a service employee in recognition of services performed, separate from the cost of the product or service. Therefore, for a payment to qualify as a tip in Kansas, the following statements must apply:

• The customer must give the payment to the employee voluntarily rather than under the instruction of the employer
• The customer must determine the amount
• The payment must be separate from the amount owed for the product or service

Tips belong exclusively to the employee. Employers may not keep or handle tips except to distribute them under an agreed-upon tip pooling arrangement. They cannot deduct any fees, including credit card processing fees, from employee tips.

What is the difference between a tip and a service charge?

While tips and charges are both amounts a customer pays in addition to the base cost of a product or service, FLSA treats them as legally distinct. Under federal law, a tip is a voluntary payment a customer awards an employee, while a service charge is a mandatory fee the employer adds to the customer’s bill.

Tips belong solely to the employee and count as employee income. Meanwhile, service charges count as business revenue and belong to the employer.

Who qualifies as a tipped employee in Kansas?

As mentioned, Kansas follows FLSA standards, which dictate that tipped workers must regularly and customarily earn $30 per month in tips. In other words, the employee must belong to an occupation where tipping is common and culturally expected.

Examples of tipped occupations include:

• Servers
• Bartenders
• Bussers
• Food runners

If the employee does not meet all of the above criteria, they are not considered a tipped employee, which means their employer must pay them full minimum wage.

Minimum wage and tip credits in Kansas

Since 2009, the hourly minimum wage in Kansas has matched the federal standard of $7.25. Kansas also follows the federal tipped minimum wage of $2.13 per hour, allowing employers to claim a tip credit of up to $5.12, provided the employee qualifies as a tipped worker and their total earnings meet the full minimum wage.

Kansas tip credit rules

Kansas uses federal rules to regulate tip credits. These rules ensure fair pay for all by defining who qualifies as a tipped employee, how employers may apply the credit, and what to do if total earnings fall below minimum wage.

Only claim tip credit from tipped employees

According to the Department of Labor (DOL), employers may only claim tip credit on the time employees spend on tipped duties. Incidental non-tip-generating duties, such as clearing tables for upcoming customers, may qualify, provided they don’t take a substantial amount of time. However, the law does not set a specific limit for this type of work.

Employers cannot claim tip credit from:

• Employees in non-tipped occupations
• Employees who spend a substantial amount of time on incidental non-tip-generating activities
• Employees in tipped occupations who earned less than $30 in tips in one month

Notify employees of tip credit arrangements

Federal law requires employers to notify employees in advance if they plan to take a tip credit. To ensure clear documentation of compliance, providing a written notice is best. Tip credit notices should clearly communicate the following:

• The reduced cash wage the employee will receive
• The amount of the tip credit the employer intends to claim
• Confirmation that tips belong to the employee
• A statement that the tip credit applies only if the employee retains all tips (except those shared through a valid tip pool)
• The terms of any mandatory tip pool

Pay the difference when total employee earnings fall short of the full minimum wage

Tip credits assume that the money an employee earns from customer tips can bring their total earnings to minimum wage. However, if their earnings fall short, the employer is liable to pay the difference. This rule assures employees of adequate pay even as customer traffic fluctuates or tipping slows down.

Does Kansas have an 80/20 rule?

As mentioned, the law allows employers to claim a tip credit for employees who perform incidental non-tip-generating tasks, provided these duties do not take a substantial amount of time. However, neither the FLSA nor Kansas law defines a specific limit on such work before an employee loses tipped status.

Because of the ambiguity of the language, Kansas employers may interpret the limits at their own discretion. For reference, many state tip laws consider “a substantial amount of time” to mean more than 20%.

Tip pooling in Kansas

Under the FLSA, Kansas employers may establish tip pooling arrangements, which combine tips into a shared fund distributed among tipped staff. This encourages teamwork, reduces competition for tips, and helps ensure fair pay for roles like bussers and food runners, who have fewer direct tipping opportunities.

Kansas tip pooling rules

In Kansas, tip pooling must comply with federal standards, which are designed to protect tipped employees. These rules clarify who qualifies as a tipped worker, how tip pools can be distributed, and whether or not employers can require tip pooling.

Who can participate in a tip pool?

If an employer claims a tip credit, only employees who customarily and regularly receive tips may participate in a tip pool. Non-tipped employees, such as cooks or dishwashers, cannot take shares from the tip pool because the employer already pays them full minimum wage. Including them in a tip pool would divert money from staff members who make lower base wages.

Additionally, employers may never include managers and supervisors in tip pooling arrangements, even if these employees perform tipped work or the establishment claims no tip credit. Their authority over business operations creates a conflict of interest and risks unfair distribution of tips.

What are the notice requirements for a tip pool?

The FLSA requires employers to inform employees about tip pooling arrangements in advance. Notices can be verbal or written, and must provide the following information:

• Who participates in the pool
• How tips are distributed
• That no part of the pooled tips will go to managers or supervisors

If tip credit applies, employers must also inform employees of the following:

• The reduced cash wage the employer will pay
• The amount of tip credit the employer will claim

Are mandatory tip pools allowed?

Federal law allows employers to require tip pooling as a condition of employment if the establishment follows all of the above conditions. If the employer breaks one of the above rules, they may not coerce employee participation in tip pooling arrangements.

Legal consequences of violating Kansas tip laws

The consequences for tip law violations in Kansas vary depending on the severity and type of offense. Most employers should expect to pay back wages, fines, and additional damages, but serious offenders might also have to face lawsuits and jail time.

Criminal penalties

In Kansas, a person who willfully violates the Kansas Statutes Annotated (KSA) labor laws (which cover wage payments) or disregards valid orders from the Secretary of Labor is guilty of a misdemeanor. Offenders may face fines of up to $1,000, up to one year in county jail, or both.

Legal liability and back pay

Employees who improperly withhold tips must pay employees back wages for the affected pay period. This penalty typically applies to employers who:

• Fail to make up the difference between insufficient tips and minimum wage
• Include non-tipped employees in tip pools even when claiming tip credits
• Allow managers and supervisors to participate in tip pools

Kansas also imposes additional penalties on employers who willfully withhold earned wages when employees quit, resign, or are discharged. This includes tips withheld from tip pools, credit card payments, or electronic payments. In these situations, the employer must pay an additional penalty equal to 1% of the unpaid wages per day (excluding Sundays and legal holidays) after an 8‑day grace period.

For example, let’s say a server quit on March 1. They previously earned $250 in credit card tips, but the employer has yet to transfer the amount. The deadline for the employer to pay was March 5, the next regular payday. However, they willfully withheld the amount until April 1.

Since the 8-day grace period ended on March 13, the employer withheld wages for 16 penalty days (19 days minus 3 Sundays). This leaves them with a penalty of 1% of $250, or $2.50 per day, amounting to $40 for 16 days. The employer now owes the employee $250 in back wages plus the $40 penalty.

Wage claims and lawsuits

Employees in Kansas may individually or collectively file wage theft claims against employers who withhold legally earned tips. They can report the issue to the Kansas Department of Labor, pursue claims through a wage board, or take legal action in court. Successful claims typically require the employer to repay the full amount owed, and may include additional penalties, interest, or liquidated damages as allowed by law.

Streamline tip management with 7shifts

Although tip management in Kansas is pretty straightforward, it still helps to support your processes with the right tools. With 7shifts’ tip management software, you can automate everything from tip reporting to documentation to the calculation and distribution of tip pooling shares. It also lets employees view their earned, calculated, and owed tips, ensuring transparency and trust within the establishment.