Must an employer always treat reported tips and overtime pay received by an employee as supplemental wages for purposes of income and employment tax withholding?

Author: Rena Pirsos, XpertHR Legal Editor

No. Employers have the option to treat reported tips and overtime pay as regular wages for income and employment tax withholding purposes, despite the fact that both types of payments fall within the definition of supplemental wages. Also, an employer may treat tips and overtime pay differently for each employee.