An Act To Amend the Laws Regarding Tips Used in Payment of Service Employees
Maine Legislature, Session 125, LD 0207
Committee Amendment CA_A_S58 (Senate)
Amends: 26 MRSA §663, 26 MRSA §664

COMMITTEE AMENDMENT "A "to S.P. 57, L.D. 207, Bill, "An Act To Amend 
the Laws Regarding Tips Used in Payment of Service Employees" 
Amend the bill by striking out all of section 2 and inserting the following: 
'Sec. 2. 26 MRSA §663, sub-§15 is enacted to read: 
15. Tip. "Tip" means a sum presented by a customer in recognition of services 
performed by one or more service employees, including a charge automatically included 
in the customer's bill. "Tip" does not include a service charge added to a customer's bill in 
a banquet or private club setting by agreement between the customer and employer. 
Sec. 3. 26 MRSA §664, sub-§2, as amended by PL 2007, c. 367, §2, is further 
amended to read: 
2. Tip credit. An employer may consider tips as part of the wages of a service 
employee, but such a tip credit may not exceed 50% of the minimum hourly wage 
established in this section. An employer who elects to use the tip credit must inform the 
affected employee in advance and must be able to show that the employee receives at 
least the minimum hourly wage when direct wages and the tip credit are combined. Upon 
a satisfactory showing by the employee or the employee's representative that the actual 
tips received were less than the tip credit, the employer shall increase the direct wages by 
the difference. 
The tips received by a service employee become the property of the employee and may 
not be shared with the employer. gervice employees may volunteer to pool their tips to 
be split among other sen'ice employees or may volunteer to share a part of their tips , .... ith 
other employees viho do not generally receive tips directly from customers. Tips that are 
automatically included in the customer's bill or that are charged to a credit card must be 
treated like tips given to the service employee. A tip that is charged to a credit card must 
be paid by the employer to the employee by the next regular payday and may not be held 
while the employer is awaiting reimbursement from a credit card company. 
Sec. 4. 26 MRSA §664, sub-§§2-A and 2-B are enacted to read: 
COMMITTEE AMENDMENT 
COMMITTEE AMENDMENT" A" to S.P. 57, L.D. 207 
I 
2-A. Tip pooling. This section may not be construed to prohibit an employer from 
establishing a valid tip pooling arrangement' among service employees that is consistent 
with the federal Fair Labor Standards Act and regulations made pursuant to that Act. 
2-B. Service charges. An employer in a banquet or private club setting that adds a 
service charge shall notify the customer that the service charge does not represent a tip 
for service employees. The employer in a banquet or private club setting may use some 
or all of any service charge to meet its obligation to compensate all employees at the rate 
required by this section.' 
SUMMARY 
This amendment replaces the proposed changes in the bill regarding the tip credit for 
employers. 
The amendment defines "tip" and clarifies that a sum presented by a 
customer in recognition of service performed is considered a tip for the service employee 
even if it is automatically included in the customer's bill or charged to a credit card. It 
also states that a service charge included in a bill in a banquet or private club setting is 
not a tip and that the customer must be notified of this, that all employees in the banquet 
or private club setting must be compensated in accordance with the State's minimum 
wage and overtime laws and that the service charge can be used to meet these obligations. 
The amendment further clarifies that tip pooling is a valid practice as described by federal 
laws and regulations. 
COMMITTEE AMENDMENT