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COVID-19 Employment Law: Tips Aren’t Cutting It

On Behalf of | Apr 1, 2020 | Coronavirus, minimum wage violation, Practice Areas, tipped employee violations |

COVID-19 Employment Law: Tips Aren’t Cutting It

Best Ohio Wage And Hour Attorney Reply: I’m not making enough money in tips to bring me to minimum wage; does my employer have to pay me more? How much should I be paid as a tipped employee during the Coronavirus (COVID-19) pandemic? What should I do if my employer won’t pay me an hourly wage on top of my tips? COVID-19 Employment Law: Tips Aren’t Cutting It

America has seen a massive halt
in most aspects of employment except for those employees that are deemed
“essential.” One class of essential employees are the restaurant workers who
deliver orders to the public who are quarantined due to the COVID-19 outbreak.
A lot of these delivery drivers and employees are typically paid a lower minimum
wage
than
the mandated minimum wage, because the tips they receive from the customers are
supposed to compensate them.

Here is the current problem for
tipped employees – all dining rooms are closed, meaning that customers are
picking up or getting delivery. Most customers are not tipping on pickups and
when there is no contact on deliveries with most deliveries being left on the
front doorstep, tips are harder to come by.

Our wage and hour attorneys have blogged about
employees’ rights to minimum wage under the Fair Labor
Standards Act
(“FLSA”). The federal minimum wage is $7.25 per hour for non-tipped employees and $2.13 per hour tipped employees as long
as the tips actually received would bring the worker’s hourly wage above $7.25
per hour. Moreover, states, like Ohio, can choose to provide a higher minimum
wage to employees, and an employee is entitled to the higher of the federal and
state minimum wages. Paying employees less than the full minimum wage based on
received tips from customers is called a tip credit. Employers can lose the
ability to apply the tip credit for a variety of reasons, including managers
and owners taking part of the tips; or forcing the employees to share tips with
traditionally non-tipped employees. (See Can My Boss Ever Share In A Tip Pool? Best Wage Lawyer!; My Boss Will Not Let Me Keep My Tips! – Call The Right Attorney; and Can I Be Forced To Tip Out Hostesses? – Call The Right Attorney).

More specifically, the U.S. Department of Labor (“DOL”) provides that:

“The employer must provide the following
information to a tipped employee before the employer may use the FLSA 3(m) tip
credit: (1) the amount of cash wage the employer is paying a tipped employee,
which must be at least $2.13 per hour; (2) the additional amount claimed by the
employer as a tip credit, which cannot exceed $5.12 (the difference between the
minimum required cash wage of $2.13 and the current minimum wage of $7.25); (3)
that the tip credit claimed by the employer cannot exceed the amount of tips
actually received by the tipped employee; (4) that all tips received by the
tipped employee are to be retained by the employee except for a valid tip
pooling arrangement limited to employees who customarily and regularly receive
tips; and (5) that the tip credit will not apply to any tipped employee unless
the employee has been informed of these tip credit provisions.”

In summation, if a tipped employee receiving
$2.13 per hour does not make sufficient tips to bring their pay to at least
$7.25 per hour, the employer must compensate the employee for the difference.
For example, if a tipped worker is making the $2.13 per hour, but is only
getting $25 in tips on an eight hour shift, he or she has made $42.04 for the
day or $5.25 per hour. This does not equal minimum wage. Under this example,
the employer company would have to make up the difference by paying an extra $2
per hour to bring the employee up to the $7.25 minimum wage.

During this pandemic, restaurants, just like
most businesses, have seen a decline in their business. Owners and managers are
looking for ways to cut corners. Unfortunately, our wage theft lawyers have
already seen employers doing this by not paying the tipped employees the
shortfall when there are not enough tips to cover the minimum wage.

COVID-19 Employment Law: Tips Aren’t Cutting It

Another wage problem that our wage theft
lawyers are seeing is when a boss, manager,
supervisor or even the owner is keeping part of a tip pool because he or she
“is also working” the job. However, the Department of Labor (“DOL”) reminds us that the law
clearly and unequivocally provides that: “Tips
are the property of the employee
. The employer
is prohibited from using an employee’s tips for any reason other than as a
credit against its minimum wage obligation to the employee (‘tip credit’) or in
furtherance of a valid tip pool.” The FLSA provides a pretty strict remedy
when a boss, manager, supervisor or owner keeps money put into a tip pool – the
employer loses the ability to claim a tip credit and must pay the employee the
full minimum wage.

Another important aspect of the FLSA is that
employees that prevail on claims have their entire attorney bill paid by the
employer. While our wage and hour attorneys take every case on a contingency
fee basis (you don’t pay a fee unless our lawyers get money for you), this
provision means that the payment of attorneys’ fees and costs usually do not
have to come out of a recovery by judgement, which means that the employees get
to keep much more of the recovery – if not all of it.

The Coronavirus (COVID-19) pandemic makes it difficult for the delivery drivers who rely on tips from their deliveries to pay their bills. Fast Company interviewed a grocery delivery worker named Sarah Elizabeth Kahler about the struggles of delivery service and the struggle to make sufficient tips during this pandemic:

“Every out-of-stock product sets off a negotiation process between
delivery workers and customers to discuss substitutions. As the number of items
in an order goes down, so does the pay, so workers have a big incentive to find
compromises. ‘I’m trying to replace what I can, and so it’s a lot of work
texting back and forth with the customer,’ says Kahler. Customers don’t always
appreciate how much work is involved, she says. One especially text-heavy order
brought in just a $10 tip. ‘Their order was between $300 and $400, so they were
tipping way less than even 10 percent,’ Kahler says. That’s one way in which
the gig business hasn’t changed. Squeezed by stingier algorithms, delivery
workers have come to rely more on generous tips to make up for shortfalls in
pay. But that’s proven a hollow promise. Some apps, such as Instacart’s,
feature fairly low default tip amounts (just 5%), and customers aren’t aware of
or sympathetic to worker’s dependence on gratuities.” – Fast Company

Additionally, employers should consider paying
their delivery employees a higher wage. These employees are quite literally
risking their lives to bring food, groceries, and other supplies to people who
aren’t willing to take the risk themselves. Fast Company also interviewed an
“Instacart shopper” (a grocery pickup and delivery service) named Vanessa Bain
who was worried about more than just her wages being reduced due to the
pandemic:

“There’s another reason, beyond crowded aisles and empty
shelves, for all the stress—people’s fear for their safety and that of their
loved ones. Bain stopped driving over a week ago due to concerns about catching
and spreading the virus, as did her husband, who also works as an Instacart
shopper. The couple has a 12-year-old child and also cares for Bain’s
grandparents, and they don’t want to risk spreading the infection. ‘It’s dangerous
work. It’s work that is done primarily by the people who can afford a medical
emergency the least,’ Bain says.” – Fast Company

So, what is the solution? What must employers
do to aid delivery drivers in making a livable wage? The answer seems to be
clear. If employees plan to keep their tip credit employees, they must
compensate them for the difference in their scheduled hourly wage and the
federal minimum wage. It is important for employers to be fair to their
employees and work together to find the right solution to the issue of short
tips. It is also up to individuals who patronize these restaurants to consider
tipping generously to fairly compensate tip credit employees for the service
they are providing and the risk they are taking.

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 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, it
is best to call our top wage lawyers now.

COVID-19 Employment Law: Tips Aren’t Cutting It

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 if I don’t get enough tips from customers”, “I’m
not being paid minimum wage” or “What do I do if my job is stealing my pay”,
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.