Best Ohio Wage and Hour Attorney Answer: Can a tip pool include employees that do not customarily receive tips? What constitutes a “tipped” employee? What can I do if my manager participates in the tip pool? Can I sue for wage theft?
At The Spitz Law Firm, LLC, our wage and hour attorneys have dedicated ourselves to helping tipped-wage employees who were forced to participate in unlawful tip pools. In fact, our overtime law lawyers have written about issues related to tipped-employee pay before. (See Top Wage Lawyer Response: Can A Restaurant Force Wait Staff To Share Their Tips With Kitchen Staff?; Top Wage and Hour Lawyer Reply: Can I Be Forced To Tip Out Hostesses?; Is Your Employer Sharing In Your Employee Tip-Pool? If So, They Owe You Wages.; Wage Attorney Top Answers: Can My Boss Share My Tips?; and Top FLSA Lawyer Reply: Can My Job Withhold Service Charges Separate From My Tips?).
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.
Recently, in Morataya v. Nancy’s Kitchen Silver Spring, Inc., the U.S. District Court District of Maryland granted, in part, a plaintiff-employee’s motion for partial summary judgment regarding her FLSA claims centering on an improper tip pool at her employer. Jessica Marlene Melgar Morataya, who was a server at Defendant’s restaurant, testified and alleged during the case that she “was never permitted to keep the tips she received from customers. Instead she was required to take tips to Mr. Barreto, the owner of Nancy’s Kitchen, or put them in a designated bag, which was called the ‘kitty.’” From there, the owner decided how the tips would be divided. Plaintiff argued that this methodology was illegal under the FLSA, especially because some of the tips were used for things like buying supplies for the restaurant and even used to pay non-tipped employees. Based on the evidence, the Court found that summary judgment on this claim was proper.
Specifically, the Court held on this wage and hour issue:
Here, Defendants have essentially admitted that their tip sharing arrangement did not lit within the parameters of § 203(m). Lest there be any doubt, other evidence solidifies the same conclusion. There is no evidence in the record that the employees of Nancy’s Kitchen ever decided or agreed to participate in a tip pool. Further, there is no evidence that Defendants ever explained to the employees that their wage would be decreased under § 203(m). In addition. Mr. Barreto admitted that he did not simply redistribute the tips that were pooled, but used the tips to buy items for the restaurant and possibly to pay non-tipped employees. In fact, it is clear that Defendants did not simply redistribute the tips evenly because the amount the employees received per day was always the same regardless of how many tips were actually received.
Based on this evidence, the Court found, very simply, that Defendant’s payment system did not meet the requirements of § 203(m) of the FLSA and thus, was illegal under federal law.
The Court also discussed the proper “remedy” for the employee in a case where there was a violation of § 203(m). The Court noted that other Circuit Court of Appeals have held that when calculating a employee’s damages for a tip pool violation, the employer cannot use the employee’s tips as an offset in determining the employee’s damages. The Court in Morataya followed this logic:
Here, Defendants gave Plaintiff an hourly wage below minimum wage and then gave her a set amount of tips in a manner that did not comply with § 203(m). Thus, Defendants cannot count what they have referred to as her daily wage as part of her minimum wage and, for the first forty hours she worked each week, she is owed the difference between S7.25 and her hourly rate of $4.00 or $4.15. For the hours she worked over forty each week, she is owed the difference between 1.5 times the minimum wage and her hourly rate.
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.