What if I told you that you could pay your U.S. Virgin Islands employees $2.13/hr, legally? You would probably say, “Sign me up!” As many employers in the Territory already know, if you are in the tourist service or restaurant industry, you can pay your employees that traditionally receive tips, no less than $2.13/hr in direct wages.

The Virgin Islands Department of Labor, Division of Labor Relations, has promulgated regulations that put strict guidelines on what is allowed in paying tipped employees and how such tips are distributed. It is essential, however, for employers who are in the tourist service and restaurant industries to abide by these regulations, or risk facing an exhaustive investigation and audit by the Virgin Islands Department of Labor with risk of fines and penalties.


Here are some of the main regulations that many employers in the U.S. Virgin Islands must be aware of and adhere to:

1.     A tip is the sole property of the tipped employee;

2.     Tipped employees should regularly receive more than $30 per month in tips;

3.     The employer must pay not less than $2.13/hr in direct wages;

4.     An employee must receive at least $7.25/hr when wages and tips are combined;

5.     If an employee’s tips combined with the wages do not equal the minimum hourly wage ($7.25), the employer must make up the difference;

6.     When an employee is employed concurrently in both a tipped and a non-tipped occupation, the tip credit is only available for the hours spent in the tipped occupation; and

7.     Where service charges are imposed and the employee receives no tips, the employer must pay the entire minimum wage and overtime.

There are many other regulations concerning tipped and non-tipped employees, including how to implement tip pooling and sharing arrangements and how tips charged on credit cards are to be distributed. We invite you to contact BoltNagi’s Labor & Employment Practice Group, to speak with one of our attorneys if you need further assistance with applying these best practices to your U.S. Virgin Islands business.