June 13, 2021

Volume XI, Number 164


June 11, 2021

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Wisconsin Legislature Expressly Authorizes Electronic Tip Declarations

Like the federal Fair Labor Standards Act, Wisconsin law allows hospitality employers to pay certain tipped employees less than the minimum wage with the understanding that the tips they receive will cover the difference. More specifically, Wisconsin law allows employers to claim a tip credit of up to $4.92 per hour for employees who “customarily and regularly receive tips.” Among other things, Wisconsin law requires employers to have a “signed tip declaration” in order to claim the credit. Wisconsin Administrative Code § DWD 272.03(2)(b)(1) states the following:

When the employer elects to take tip credit the employer must have a tip declaration signed by the tipped employee each pay period and show on the payroll records that any required social security or taxes have been withheld each pay period to show that when adding the tips received to the wages paid by the employer, no less than the minimum rate was received by the employee. When the employer’s time and payroll records do not contain these requirements, no tip credit shall be allowed.

Based on the express language of the code, there has been debate about what constitutes a “signed tip declaration” and—more specifically—whether an electronic signature could suffice. Many Wisconsin employers had required employees to electronically complete and sign tip declarations through their point-of-sale systems. The Wisconsin Department of Workforce Development (DWD), which is responsible for enforcing the state’s tip declaration requirements, had never formally interpreted the signature requirement to be limited to “wet ink” signatures. Moreover, Chapter 137 of the Wisconsin Statutes, which governs electronic transactions and records, provides in part that “if a law requires a signature, an electronic signature satisfies that requirement in that law.” Nonetheless, lawsuits filed against employers for unpaid wages had claimed that electronic tip declarations did not satisfy the signature requirement and therefore barred employers from claiming a tip credit.

Effective April 24, 2021, Wisconsin has modernized its tipped credit law to expressly provide for electronic verification of an employee’s tip declaration. The legislature added language to Wis. Stat. § 104.045(1)—Wisconsin’s tip credit statute—that specifically “allow[s] an employer to require a tipped employee to use an electronic signature or other electronic means that uniquely identifies the employee to acknowledge the counting of tips or similar gratuities.” (Emphasis added.) Moreover, the new law specifically incorporates by reference Chapter 137’s definition of “electronic signature,” ensuring that an employee can validly and conclusively execute a tip declaration without a “wet ink” signature.

This amendment corresponds with what many employers were already doing, and it may provide some relief to employers with electronic tip declaration processes. The DWD’s implementing regulations under § DWD 272.03(2) have not been correspondingly amended.

© 2021, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.National Law Review, Volume XI, Number 133



About this Author

Keith Kopplin, Ogletree Deakins Law Firm, Labor and Employment Litigation Attorney

Keith E. Kopplin’s practice focuses on employment litigation and employment law matters.

Keith strives to find creative and cost-effective solutions to some of the most vexing workplace issues, including Family and Medical Leave Act abuse, incidents of off-the-clock work, and reasonable accommodation requests.  He has given presentations on numerous topics, including the use of social media by employees, Wisconsin’s concealed carry law, employee handbooks, workplace violence, employee privacy, the hiring process, the Wisconsin and federal Family...

Christina Wabiszewski, Ogletree Deakins Law Firm, Milwaukee, Labor and Employment Law Attorney

Christina is an associate attorney at Ogletree Deakins.  Prior to joining the firm, Christina served as a judicial law clerk to the Honorable Rebecca G. Bradley at the Wisconsin Supreme Court. 

While in law school, Christina worked as the lead research assistant to Dean Joseph D. Kearney.  She served as the symposium editor on Marquette Law Review.  Her comment, “Diversions from the Great Lakes: Out of the Watershed and in Contravention of the Compact,” was published in Volume 100 and received the Gold Quill Award for best student-...