Some employers are now changing their hourly employees over to salary, and doing so is legal if done properly. Switching back is legal, too, again provided it is done legally. Recent changes are due in many cases to the Fair Labor Standards Act (FLSA)’s overtime rule, which started in January 2020.

What qualifies as a salaried position?

Federal law states that a salaried employee is one who routinely receives a predetermined amount of money that isn’t subject to deductions for quality or quantity of work. For example, a salaried employee cannot be paid less if he finishes a project in a smaller amount of hours than anticipated.

How much gratuity can an employer pay to an employee?

However, an employer can choose to pay more gratuity to an employee (since it is a form of tip as mentioned in the beginning) but then the amount as restricted by the Gratuity Act cannot exceed more than Rs.10 lac.

How are tips and gratuities protected under the Labor Code?

As mentioned above, Labor Code section 351 provides that tips and gratuities are the sole property of the employee or employees to whom they are given. At first glance, this would seem to permit employees to file a lawsuit against their employer’s for violating their tip rights.

How are auto gratuities distributed to an employer?

An employer may distribute service charges (sometimes referred to as “auto-gratuities”) collected from customers as it chooses and to any employee it chooses. The employer also has the option of retaining all or part of the service charges.

When do you have to report tips and gratuities?

This means that CPP contributions and EI premiums must be deducted at source, if the employee is employed in pensionable or insurable employment or both. Note for employees: For information on how to report tips and gratuities shown in box 14 of your T4 slip, go to Line 10100, Employment income.