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Top Wage and Hour Lawyer Reply: Can I Be Forced To Tip Out Hostesses?

On Behalf of | Jul 25, 2014 | Wage: Minimum Wage, Wage: Tipped Employees |

Best Ohio Wage and Hour Attorney Answer: Which employees can participate in a tip pool? What employees do not customarily receive tips? What constitutes a “tipped” employee? If my employer includes both tipped and non-tipped employees in the tip pool, is that legal?

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Our wage and hour attorneys have previously blogged about tip pools and the several tip pool requirements that an employer must meet to be permitted to pay tipped employees less than the minimum wage. Nonetheless, a little refresher is always helpful.

Section 203(m) of the Fair Labor Standards Act (“FLSA”) allows employers to pay certain employees at an hourly rate less than minimum wage as part of a “tip credit” as long as those same employees earn tips that make up the gap between the hourly rate and minimum wage. A common example of this kind of “tip credit” can be found in most restaurants where servers are usually paid a small hourly wage plus tips.

Employers that utilize a tip credit, however, can run into trouble if they allow “customarily non-tipped employees” to participate in a tip pool along with tipped employees. A “tip pool” is a procedure used in a lot of restaurants and establishments whereby the employees who receive tips are required to “pool” those tips so that other employees, who may not directly receive the tips, can receive a portion of the tips pursuant to the company’s policy. Where the trouble lies for employers is when “non-tipped” employees are allowed to participate in the tip pool and take a portion of the tips from the servers and/or other tipped employees.

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Our wage and hour lawyers recently blogged about tip pools being invalidated based on requirements that servers share tips with kitchen staff and stockers. But, what about hostesses?

The seminal case in the Sixth Federal Circuit (Ohio) on this issue is still Kilgore v. Outback Steakhouse of Florida, Inc. In Kilgore, the specific issue before the Court of Appeals was whether the “hosts” at Outback could legally participate in the restaurant’s tip pool along with other tipped employees. The case hinged on the legal question of whether the “hosts” at Outback were customarily tipped employees. The Court first looked to the language in Section 203(t) of the FLSA which defines “tipped employee” as “any employee engaged in an occupation in which he customarily and regularly receives more than $30 a month in tips.” That definition essentially contains a two-part analysis, (1) whether the position is one that customarily receives tips and (2) whether the employee in question receives at least $30 a month in tips.

In Kilgore, the second element was not at issue as it was admitted that the “hosts” at Outback received at least $30 a month in tips. That left the question of whether the “host” position is “an occupation” that customarily receives tips. The Court sided with Outback on this issue. Specifically, central to the Court’s analysis was determining the level of direct customer contact that the position in question entailed. In Kilgore, the Court held that “hosts” have ample customer contact, similar to servers and bartenders, and therefore they should not be grouped with traditional non-tipped employees like cooks, dishwashers and chefs who usually work out of sight from the bar or dining area. As such, these “hosts” could be considered “tipped employees” under the FLSA; therefore, their participation in the tip pool was valid.

Specifically, the Sixth Circuit Court of Appeals held:

Hosts at Outback are “engaged in an occupation in which [they] customarily and regularly receive[ ] tips” because they sufficiently interact with customers in an industry (restaurant) where undesignated tips are common. Although the parties dispute exactly how hosts spend their time working at Outback, hosts do perform important customer service functions:  they greet customers, supply them with menus, seat them at tables, and occasionally “enhance the wait.”   Like bus persons, who are explicitly mentioned in 29 C.F.R. § 531.54 as an example of restaurant employees who may receive tips from tip outs by servers, hosts are not the primary customer contact but they do have more than de minimis interaction with the customers.   One can distinguish hosts from restaurant employees like dishwashers, cooks, or off-hour employees like an overnight janitor who do not directly relate with customers at all.   Additionally, the fact that Outback prohibits hosts from receiving tips directly from customers provides some evidence that Outback hosts work in an occupation that customarily and regularly receives tips.

I do not agree. If you polled 100 random people on the street, how many people do you think have tipped the host or hostess at an Outback? Or for that matter, at T.G.I. Fridays, Ruby Tuesday’s, Olive Garden, or the like. I consider myself a pretty generous tipper, having grown up serving tables, but have never tipped a hostess or host at one of these restaurants. So the next dollar that I give to the host or hostess at the Red Lobster will be my first. While bus persons are mentioned in the statute, the fact that hosts and hostesses are not should be seen as legislative intent not to include them as tipped employees.

But, this is now the law of the Sixth Circuit, which obviously controls over my opinion. However, because the Court of Appeals considered some very fact specific evidence regarding Outback, there may be room to argue that it does not apply to other restaurants.

Are you a waiter, waitress, server at restaurant that depends on tips to live? If you are a tipped employee and believe that your employer is not paying you all of your wages for all of your lawfully earned time or taking part of your tips or participating in the tip pool as prohibited under the Federal Fair Labor Standards Act or Ohio Fair Labor Standards Act, contact the attorneys at Spitz, The Employee’s Law Firm today for a free and confidential initial consultation. The wage and hour lawyers at Spitz, The Employee’s Law Firm will provide you with the best options for your overtime pay dispute situation. If you even think that you may be entitled to overtime pay that you are not being paid, call 866-797-6040.

Disclaimer:

The materials available at the top of this tipped wage violation, wage and hour web page and at this employment law website are for informational purposes only and not for the purpose of providing legal advice. If you are still asking, “Can my boss take my tips?”, “Does my job have to pay me for …”, “My paycheck is not right…” or “What do I do if…”, the your best option is to contact an Ohio wage attorney to obtain advice with respect to FLSA questions or any particular employment law issue. Use and access to this employment law website or any of the links contained within the site do not create an attorney-client relationship. The legal opinions expressed at the top of this page or through this site are the opinions of the individual lawyer and may not reflect the opinions of Spitz, The Employee’s Law Firm, Brian Spitz, or any individual attorney.

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