Yiiiiikes. Okay, so she can probably claim a 3M tip credit (since we do meet the standard for being considered “tipped workers”), but that’s extremely questionable. The federal guidelines define tipped workers as ‘any employee engaged in an occupation in which he or she customarily and regularly receives more than $30 a month in tips.’ This effectively means she can compensate you at the tipped minimum wage, commonly referred to as “server’s wages.” Apparently, she’s set that base rate at $10 (which isn’t much better than server’s wages, IMO), but taking a tip credit is a real shitty look, considering that tip credits are typically only applied to completely uneducated, entry-level workers whose tip income is substantial. I wrote more about this topic more here, so I recommend reading this article. What she’s doing is likely legal, but tacky.

Hi there! Unless the 12.5% are deducted for employment taxes (which I doubt, unless your state employment taxes are nearly 5%) these deductions from your tips likely are not legal. Federal law assures that tips are the property of the employee. The only exception is when a valid tip pooling agreement exists. In some states, it is legal for the employer to deduct the cost of credit card processing on tips made by credit card, but we can be certain that isn’t the case in your situation, as NO merchant services company charges 12.5%. (Generally, they charge 2-3%.)

Ask about those deductions immediately. Your tips are wages. Any unlawful deduction from them constitute wage theft.

Unless state laws say otherwise, employers typically can choose when to distribute tip income. Many wait until the end of the pay period and include the tips in paychecks to ensure they report and tax the tip income properly, and meet their prevailing wage obligations. If this isn’t the case in your salon, I’d be monitoring the checks carefully. Tip theft is really easy for salon owners to commit.

It’s not. If the receipt declares the gratuity a gratuity (and not a service fee), that money is yours.

No. Federal law declares that tips are the property of the employee. Only legal tip pooling arrangements are exempted.