DE HB251

Clarifies that tipped employees must earn at least 50% of their income from tips or gratuities received directly from customers, not from tip pools or other distribution mechanisms.

Requires employers to pay employees for automatically-added tips and credit card tips by the next regular payday, without deducting credit card service fees or other amounts from the employee's tips.

Mandates employers provide advance written or oral notice to tipped employees about the direct wage amount, tip credit amount, tip retention requirements, and tip pooling arrangements before using a tip credit.

Limits mandatory tip pooling to 15% of the primary direct service employee's gratuities and prohibits employers from retaining any portion of employee tips or gratuities.

Establishes civil penalties of $1,000 for first violation, $2,000 for second violation, and $5,000 for each subsequent violation of tip handling and notice requirements.