Restaurant and Tipped Workers

Wage Law

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Referring to Attorney Andy Biller, "the Court also finds that the attorneys were highly skilled. * * * The litigation of the issue of Rule 23 certification for Ohio minimum wage claims was, in particular, an area that required skillful wage-and-hour attorneys."

-Chief Judge Algenon Marbley, federal judge of the United States District Court for the Southern District of Ohio (Castillo v. Morales, Inc. a case that resulted in a multi-million Dollar settlement on behalf of Columbus-area restaurant workers)

There's not much we can do about a customer stiffing you.

 

But, when your boss does it, there's a lot we can do.

 

We love our service industry clients like servers, waiters/waitresses, bartenders, and other restaurant employees. Why? First, they are awesome people. Second, we get to show them how much legal power they have to get paid a fair wage.

When it comes to tipped minimum wage, it is a "with great power comes great responsibility" situation. Yes, the law gives employers "great power"- they can pay little as $2.13 per hour. But, employers also have a "great responsibility" to follow all of the rules that allow for the lower wage. And when an employer doesn't follow the rules, well, that's where we come in.

You can learn some of the basic rules on this page. The key thing to keep in mind is that when an employer breaks the tipped wage or "tip credit" rules, they typically owe the workers the difference between full minimum wage and the tipped wage they paid. And tips do not reduce this amount owed.

 

If you need more information or want help filing a claim for unpaid wages, please call us today at (513) 202-0710. We are happy to talk to you and evaluate your case for free.

Tipped Minimum Wage Rules

Rule # 1: Your employer must inform you of the legal provisions related to paying tipped minimum wage.


The first rule is that your employer has to tell you about the Fair Labor Standards Act's provisions related to paying tipped minimum wage. The FLSA's regulations go on to say this must include informing you as to the wage rate you will be paid, the amount of the tip credit the employer will claim (in other words, what is the difference between full minimum wage and your actual wage rate), that the employer will make up the difference between what you receive and minimum wage if the tips are not sufficient, and that you will be permitted to retain all of your tips, except if the company maintains a valid tip pool.

At first, this may seem like an odd requirement.

But when you really think about it, it makes sense. Employees need to know the requirements for taking a tip credit in order to know if their employer is applying it correctly. Because employers choose to place their employees in this precarious position (being paid below minimum wage), the employers are strictly held to the requirements for claiming a “tip credit.” A properly informed tipped employee can recognize a tip credit violation and call it out. Thus, employers must make sure their employees are properly informed.




Rule # 2: You must be allowed to keep your tips. The only exception is for tip pools that include ONLY other tipped employees.


Under federal law (the Fair Labor Standards Act), employers are permitted require employees to "pool" or share their tips. But, the tip pool must only include tipped employees and NOT managers, even when those managers are acting as servers.

Rule #2 sounds so easy, but this is where we see the most employers breaking the law in this area. Some common ways employers break this rule are:

  • Allowing non-tipped workers to share in the tip pool. This can include managers and owners (even if those people also act as servers), cooks, dishwashers, cashiers, and other employees who don’t usually earn tips.
  • Keeping more than 2-4% of credit card tips to cover credit card fees.
  • Keeping tips from takeout orders.
  • Keeping tips for any other reason. For example, we've seen a restaurant that kept tips to distribute them to other employees, but, when there was a surplus of the tips, the restaurant kept the tip money. Luckily, a couple of employees figured out that the math wasn't adding up, and we were able to help.




Rule # 3: Your employer can only pay you a tipped wage when you are actually doing tipped work.


Almost every tipped worker deals with “side work.” If you are a tipped employee, you know the drill—clean some glasses, wipe down the bar, roll some silverware.

Employers are permitted to pay a tipped wage for non-tipped work that is “related” to the employee’s tipped duties. In other words, making coffee is normally okay, but if you are cleaning bathrooms and re-arranging furniture, at a tipped wage, your employer is likely violating the tip rules.




Rule # 4: Your employer cannot make you pay for things like uniforms, tools, customer walk-outs, or drawer shortages.


Tipped employees are paid a form of minimum wage. Because of that, any deduction from wages or expense the employee incurs will drop employee below minimum wage. When this happens, the employer breaks the rules.

For example, if an employer requires employees to pay for uniforms, customer walkouts, cash register shortages, broken dishes, pens/corkscrews/other equipment, this cuts into the employee's wage. This is true even if the employee earns enough in tips to cover the expenses. Remember, the employer's obligation to pay a wage is separate and apart from the tips an employee earns.




Bonus: What happens when your employer doesn't follow the tip credit rules?


If an employer breaks these rules, then they are not permitted to pay you tipped minimum wage. They should have paid you full minimum wage instead. But, because they didn't, they can owe you back pay equal to the difference between full minimum wage and they wage that the employer actually paid. Here is an example. Let's say that you start working for a restaurant, and your boss never properly informs you of the FLSA's tip credit provisions. In spite of that, the restaurant pays you $2.13 per hour. Your employer didn't follow the rules, so they aren't allowed to pay you this amount. Instead, your employer should have paid you the full minimum wage amount of $7.25 per hour. The amount you are owed in backwages is $7.25 (full minimum wage) minus the $2.13 you were paid or $5.12 for every hour you worked. As you can guess, this adds up quickly. But there's more. The Fair Labor Standard Act allows you to recover the unpaid wages and an equal amount in "liquidated damages." Thus, that $5.12 becomes $10.24 per hour. Some state laws are even more generous. For example, Ohio law allows you to recover three times your unpaid wages. So the $5.12 becomes $15.36 per hour. Also, if your employer illegally keeps your tips, a recent change to the Fair Labor Standards Act allows you to recover the illegally retained tips too, and liquidated damages. This is in addition to the amount that the employer underpaid you. So is it worth your time to call a lawyer on these issues? Absolutely! The amount you may be owed could surprise you.





Bartender with Beer

We are proud of our work on behalf of restaurant workers. We've represented hundreds of folks in the service industry like bartenders, waiters, waitresses, and bussers. We enjoy serving those who serve others.

We have listed a couple of our victories on behalf of restaurant workers on Our Victories page. We encourage you to take a look. Obviously, every case is different, and we cannot guarantee any particular result.

We also handle smaller cases against single restaurants or even on behalf of individual restaurant workers. So please reach out if you think you have a case or if you just have some questions. The call is free and there is no pressure to pursue anything beyond that phone call.

Are workers entitled to protection under minimum wage and overtime laws, regardless of immigration status?

Whatever you think about it, the reality is that many illegal aliens/undocumented workers are employed in restaurants. Does the law protect these workers too?

Yes. You are still entitled to minimum wage and overtime under our laws, even if you are not a lawful resident of the U.S.

 

In spite of this, we have dealt with a number of employers who specifically hire illegal immigrants because the employers think that those workers are less likely to stand up for themselves when it comes to working conditions and wages. If you are in this situation - you do not have work authorization and are being unlawfully underpaid - please contact us. We would be happy to confidentially talk with you at no charge and go over your options. Call us at (513) 202-0710 to discuss your case.

Want the legal details?

If you want to learn some of the legal details of the rules that apply to tipped workers, tipped minimum wage, and the "tip credit," you've come to the right place. Below, we have some of the specifics.

Tipped Minimum Wage Basics

Rule 1: The Fair Labor Standards Act ("FLSA"), 29 U.S.C. 206, requires companies to pay employees at least minimum wage.

Rule 2: The FLSA, 29 U.S.C. 203(m), allows companies to pay workers a "tipped minimum wage" for time spent earning tips (time spent serving customers).

 

Rule 3: FLSA Regulation 29 C.F.R. 531.56(e) requires employers to pay full minimum wage, rather than tipped minimum wage, for time spent in a non-tipped occupation (like extensive side-work not related to actually serving customers).

 

The Requirements that Restaurants Must Meet to Pay Tipped Minimum Wage

 

The FLSA, 29 U.S.C. 203(m)(2)(A)(ii), requires employers to meet the following requirements to pay a tipped wage:

Rule 1: The employee must be "informed by the employer of the provisions of" the FLSA's tip credit section. The Code of Federal Regulations, 29 C.F.R. 531.59, states that employers must inform employees of the following: (1) the amount of the employee's wage, (2) the amount of "tip credit" claimed by the employer, (3) that the employee must keep all tips except as part of a valid tip pool, (4) that the employer cannot pay a tipped wage unless it tells the employees of these provisions.

Rule 2: The employee must be allowed to keep all of their tips except that "pooling of tips among employees who customarily and regularly receive tips" is permitted.

Rule 3: The employer "may not keep tips received by its employees for any purposes, including allowing managers or supervisors to keep any portion of the employees' tips, regardless of whether or not the employer takes a tip credit." This comes from 29 U.S.C. 203(m)(2)(B).

If you are a tipped restaurant worker, and you think you might have a claim or even just have a question, please contact us at (513) 202-0710. We would be happy to discuss your options and rights. The call is free and there is no obligation.

Contact Biller & Kimble, LLC today for a free consultation.

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