Pay, overtime and tips in a nail salon

Nail salon pay often mixes several things at once: a fixed amount, a percentage of each service, plus the tips customers hand over. That mix is exactly why so many workers cannot tell whether they are being underpaid.

This page covers federal law, the floor that applies everywhere in the US. Your state may require more.

Minimum wage#

The federal minimum wage is $7.25 per hour, effective 24 July 2009.

Many states set their own, higher minimum. The Department of Labor is clear that employers must comply with both laws, which in practice means you are owed the higher figure.

Overtime#

If you are covered and not exempt, you must be paid at least one and a half times your regular rate for every hour over 40 in a workweek.

Some important details in how the law counts hours:

• It works week by week. A workweek is a fixed, regularly recurring period of 168 hours, seven consecutive 24-hour days. It does not have to match the calendar week.
• Averaging across weeks is not allowed. A 50-hour week followed by a 30-hour week still owes overtime on the 50-hour week.
• There is no cap on how many hours someone aged 16 or over may work in a week under federal law.
• Weekends and holidays are not automatically extra. Federal law only counts hours past 40 in the week.
• Overtime must be paid on the regular pay day for the period in which it was earned.

Tips#

This is the part the law changed, and many salons still get it wrong.

Owners and managers may not keep tips#

After the FLSA was amended in 2018, the Department of Labor issued rules effective 30 April 2021 providing that:

• an employer cannot keep employees' tips under any circumstances
• managers and supervisors also may not keep tips received by employees, including through tip pools

Managers and supervisors may only keep tips a customer gives them directly, for a service the manager or supervisor solely provided.

Tip pools#

Where a salon runs a mandatory tip pool, the rules say the collected tips generally must be fully redistributed within the pay period.

If the employer pays the full minimum wage and takes no tip credit, it may let workers who are not tipped employees, for example support staff, take part in the tip pool.

What a tip credit is#

The law lets an employer count part of your tips toward its minimum wage obligation. That is the tip credit.

The condition: an employer claiming a tip credit must ensure that tips from customers plus direct cash wages per workweek equal at least the minimum wage and the overtime pay the FLSA requires.

In other words, a tip credit never lets an employer pay you below the floor. It only lets tips count toward it. In a slow week with few tips, the employer has to make up the difference.

The maximum tip credit and the minimum cash wage differ by state, and some states do not allow a tip credit at all. Check your own state's rule.

If you think you are being underpaid#

1. Keep your own record of hours, every day, even where the salon has a time clock. Note start, finish and breaks.
2. Keep every pay stub, plus screenshots of messages about pay, hours and tips.
3. Read your pay stub closely so you know what each deduction is.
4. Check whether you have been misclassified as an independent contractor. See employee or contractor, because a great many underpayment cases start there.
5. Contact the Wage and Hour Division at the Department of Labor, or your state labor agency.

A wage complaint does not depend on your immigration status.