Best Ohio Tipped Employee Wage Claim Attorneys Reply: Can my boss take a percentage of my tips? Can my job withhold credit card fees out of my tips? What should I do if my manager is keeping part of my tips out of my paycheck to cover so-called costs?
You know when someone says, “it’s just the cost of doing business” that usually means you are going to end up spending extra money. But have you ever wondered just what the actual cost of doing business really is? In the case of wage violations the answer is usually way more than just complying the first time around. As our wage and hour attorneys have blogged about before, the Fair Labor Standards Act (“FLSA“) is a collection of federal laws that require employers to pay minimum wages as well as overtime wages to non-exempt employees. (See How Do I Prove That I Was Not Paid Overtime? – Call The Right Attorney; Can My Job Sue Me If I Sue For Overtime?; Should I Be Paid Overtime Even If I’m A Manger?; What Is Minimum Wage In Ohio For 2016? ; and Does My Job Need To Pay Me Minimum Wage?). Additionally, our wage theft lawyers have blogged regarding the FLSA’s special rules for tipped employees – like waiters, waitresses, servers and bartenders. (See Should Tipped Workers Be Paid Overtime?; FLSA Law: Can My Job Withhold Service Charges From My Tips?; My Boss Will Not Let Me Keep My Tips! – Call The Right Attorney; and Can I Be Paid Only In Tips? – Call The Right Attorney).
Recently, the Fifth Circuit U.S. Court of Appeals held that costs incurred by an employer for credit card processing service fees can be passed on to employees. Specifically, in Steele v. Leasing Enterprises, Limited, a group of employees sued their employer, a popular restaurant chain in Texas, because their employer was withholding 3.25 percent of their credit card tips to offset costs. The problem is that the restaurant chain withheld more than just the standard fee for using credit cards because they wanted to make up for other additional costs – like having cash delivered to their restaurants.
This cash delivery was not a “required” expense for processing cards. Instead, having cash delivered was a business choice made by the employer. Citing to case law from the Sixth Circuit U.S. Court of Appeals, (the Appellate Court for cases heard in federal court in Ohio) the court explained just what type of costs an employer is allowed to pass on to their tipped employees:
In Myers, the Sixth Circuit allowed the employer to offset tips to cover reasonable reimbursement for costs “associated with credit card tip collections” and highlighted that credit card fees were “required” to transfer credit to cash 192 F.3d at 554-55 (emphasis added). That court emphasized that the employer’s deductions were acceptable because “[t]he liquidation of the restaurant patron’s paper debt to the table server required the predicate payment of a handling fee to the credit card issuer.” Id. at 553-54. The Department of Labor incorporated a reading of Myers in an opinion letter:
The employer’s deduction from tips for the cost imposed by the credit card company reflects a charge by an entity outside the relationship of employer and tipped employee. However, it is the Wage and Hour Division‘s position that the other costs that [an employer] wishes the tipped employees to bear must be considered the normal administrative costs of [the employer’s] restaurant operations. For example, time spent by servers processing credit card sales represents an activity that generates revenue for the restaurant, not an activity primarily associated with collecting tips.
U.S. Dept. of Labor Wage and Hour Division Opinion Letter FLSA2006-1. While it is unnecessary to opine whether any costs, other than the fees charged directly by a credit card company, associated with collecting credit card tips can ever be deducted by an employer, we conclude that an employer only has a legal right to deduct those costs that are required to make such a collection.
Ultimately, the Court in Steele upheld the trial judge’s decisions to permit the formation of a second group of employees who can also bring suit for wage violations. The court also denied the employees’ original request for additional liquidated damages and awarded two years’ worth of damages back to the employees instead of the three years’ worth of back pay that could have been given if the Court agreed that the Restaurant’s actions were willful. Even though the employees didn’t get everything they wanted, the outcome was favorable for them because they may not end up having to pay their attorneys because their employer will have to do that for them.
That’s right. In addition to the wages owed, the Court ordered the trial judge to award the Plaintiffs reasonable attorney fees and costs. It turns out that the amount of money saved by the Restaurant’s decision to recoup costs from their employees’ tips will end up costing them a pretty penny. At the end of the day, if the employer had ponied up the small percentage it withheld for discretionary costs they may not have ended up paying an arm and leg in attorney’s fees.
Are you a waiter, waitress, server, or bartender 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.
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.