Tips: is a gratuity given to an employee and need no to be included in the calculation of the regular rate but can be count towards the employers minimum wage requirements of tipped employees.

Service Charge: if a % service charges are being added to all bills and percentage of those charges are distributed to the employees. Service Charges are a compulsory charge for service. The sums distributed to employees from service charges are not tips but may be used to satisfy the employer’s minimum wage and overtime pay obligations under the FLSA.  Further, these sums are part of the employee’s total compensation and must be included in the regular rate of pay for computing overtime.

Overtime Violation: If the employer does not include the service charge in the regular rate of pay during overtime workweeks of nonexempt employees.