Best Ohio Wage Attorney Answer: Why Are Employers Allowed To Pay Tipped Employees Less Than The Minimum Wage? What Is The Difference Between A Valid Tip Pooling Arrangement And An Invalid Tip Pooling Arrangement? Can My Employer Force Me To Share Tips When Doing So Means I Get Paid Less Than Minimum Wage?
Many restaurants and bars pay their servers, bartenders, and other employees who receive tips less than the minimum wage. Why? Because the Fair Labor Standards Act (“FLSA”) generally allows them to. The FLSA provides that employers can pay tipped employees, such as servers, a minimum wage of $2.13 per hour and apply a tip credit of up to $5.12 an hour. Now, this comes with many caveats- as our wage and hour attorneys have previously blogged about tip pools, there are several tip pool requirements that an employer must meet to be permitted to pay tipped employees less than the minimum wage. However, the basic idea is that, at least in theory, a tipped employee should end up making at least the minimum wage, if not exceeding it, when their tips are added to their hourly wage.
Because employers are only required to ensure that their employees get paid the minimum wage, many businesses will create a “tip pool” to ensure that most, if not all of their tipped employees are receiving at least the minimum wage. As a result, tipped employees will be required to pay in a portion of their tips into a pool, which is then divided and shared amongst other tipped employees.
However, tip pools must meet certain requirements to be valid. First, the employer cannot force an employee to pay into the pool more than a “customary and reasonable amount,” or 15 percent of their tips (or two percent of daily gross sales). Second, the employer cannot share in the tip pool, as our attorneys have previously blogged. Third, contributing to the tip pool cannot have the effect of dropping a tipped employee’s hourly rate below the minimum wage. Finally, tipped employees cannot be forced to share tips with non-tipped staff, such as cooks, janitors, and dishwashers.
Roy’s Restaurant recently found out about this last tip pooling requirement the hard way. Roy’s, a Hawaiian restaurant chain, had a tip pooling policy that required tipped employees to share tips with “back stockers.” Back stockers were employees who dressed like host, but whose primary responsibility was to polish glasses and silverware. Roy’s paid its back stockers less than minimum wage, and they received a portion of the tips that tipped employees earned. However, when the Department of Labor (“DOL”) learned about this arrangement, it declared that the tip pooling arrangement was invalid, because back stockers were a part of the kitchen staff, and therefore ineligible to share in tip pool. As a result, Roy’s was required to pay $225,000 in back wages to both the back stockers (who were improperly paid less than the minimum wage) and to tipped employees who were forced to share their tips with them. For the servers, the employer had to make up the difference by paying the all the tip credits taken for each server without any consideration for the tips actually received.
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 the Spitz law firm today for a free and confidential initial consultation. The wage and hour lawyers at the Spitz 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.
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 the Spitz law firm, Brian Spitz, or any individual attorney.