North Carolina’s Wage and Hour Act exempts many employees covered by the federal Fair Labor Standards Act from its minimum wage, overtime, youth employment, and recording keeping requirements, specifically those employees who work for enterprises engaged in commerce or in the production of goods for commerce as defined in the Fair Labor Standards Act. NC Statute 95-25.14(a)(1)
Thus, many employers and employees in North Carolina should refer to the Fair Labor Standards Act and its regulations for purposes of determining minimum wage and overtime rights and responsibilities. There are additional exemptions to North Carolina’s minimum wage, overtime, youth employment, and recordkeeping requirements as set forth below.
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Tip minimum wage
North Carolina’s minimum wage for tipped employees is $2.13.
North Carolina’s law defines tips as any money that exceeds the amount due to a business for goods, food, drink, services, or articles that are given by a given or left by a customer for an employee. NC Statute 95-25.2(15) Tips do not include mandatory service charges customers are required to pay. NC Admin. Code 13-12.0303(b)
Employers may pay employees tipped wages if:
- the employees customarily receive more than twenty dollars ($20) per month in tips;
- the employees are notified in advance they will be paid the tipped wage rate; and
- the employees are permitted to retain all tips subject to any valid tip pooling arrangement
Employers must keep the following records for each employee for whom a tip credit is claimed:
- the amount of tips received for each workweek as such tips are certified by the employee monthly or for each pay period.
- the employee certifies their by signing or initialing employer’s records
- an employee’s acceptance of wages from the employer does not constitute certification by the employee of tips received
- the amount claimed by the employer as tip credit for each employee for each workweek;
- for each employee participating in a tip pool, for each workweek, the amount of contributions to the tip pool; and
- for each employee participating in a tip pool, for each workweek, the amount received from the tip pool.
If employees refuse to certify tips received or does not do so accurately, an employer may still pay employees the tipped minimum wage if it can show:
- show it paid the employee as required and kept required records; and
- demonstrate with written documentation for each workweek for which a credit is claimed:
- that the tipped employee certifies having received tips in the amount for which the credit is taken, or
- that a similarly situated tipped employee received tips in the amount for which the credit is taken, or
- by other method which reliably establishes that the tipped employee regularly receives tips in the amount for which the credit is taken.
When customers pay tips by credit card, the employer must pay the tips to the appropriate employees no later than the next payday. An employer may deduct from employees’ tips the portion of credit card fees attributable to the tips. NC Admin. Code 13-12.0303(d)
Tip pooling and sharing
North Carolina law permits employers to require tipped employees to participate in a tip pooling arrangement. NC Admin. Code 13-12.0303(c) Tip pooling is defined as an arrangement where all or part of contributing employees tips are combined to be divided among all participating employees according to a pre-set formula. Tip pool arrangements are valid in North Carolina if:
- employees are notified of the arrangement before the pay period in which they will participate;
- the share of each contributing employee is at least 85% of the employee’s tips before the employee contributes to the tip pool; and
- only employees who customarily and regularly receive tips participate in the tip pool.
Employees with disabilities
North Carolina minimum wage laws allow employers to pay employees with disabilities a subminimum wage rate that is less than the standard minimum wage if it files an application and obtains a certificate to do so from North Carolina Wage and Hour Bureau.
Typically, an employer will not be approved to pay a disabled employee less than 50% of the standard minimum wage; however, a lower wage may be approved if it is shown that the employee has multiple disabilities or is otherwise so severely impaired a lower rate is justified. A certificate covers a three year period and may be renewed by the Wage and Hour Bureau. NC Statute 95-25.3(c); NC Admin. Code 13-12.0202.
North Carolina minimum wage laws does not permit employers to pay trainees a wage rate less than the standard minimum wage. NC Statute 95-25.14(a)(1)(b)
North Carolina minimum wage law allows employers to pay apprentices, as defined by the Fair Labor Standards Act, a subminimum wage rate that is no less than 90% of the standard minimum wage. NC Statute 95-25.3
North Carolina minimum wage law allows employers to pay learners, as defined by the Fair Labor Standards Act, a subminimum wage rate that is no less than 90% of the standard minimum wage. NC Statute 95-25.3
North Carolina minimum wage law allows employers to pay student learners, as defined by the Fair Labor Standards Act, a subminimum wage rate that is no less than 90 percent of the standard minimum wage. NC Statute 95-25.3
North Carolina minimum wage law allows employers to pay student workers, as defined by the Fair Labor Standards Act, a subminimum wage rate that is no less than 90% of the standard minimum wage. NC Statute 95-25.3