Frequently Asked Questions About Wage: Tipped Employees
The line between a wage and tips can be blurred by employers looking to cut corners. Here are a few of the more popular questions The Spitz Law Firm, LLC sees on a regular basis:
Am I A Tipped Employee? Am I Subject To The Tip Credit Being Taken Out Of My Paycheck?
Wage: Tipped Employees Attorney: There are many different tipped employees, but the most common examples are waiters, waitresses, servers, bartenders, and valets. Again, under the FSLA, you would be considered a tipped employee if you customarily and regularly earn more than $30 a month in tips. By contrast, non-tipped employees are those who are paid at least minimum wage and do not interact with customers.
Can My Boss Take A Tip Credit Without Telling Me? When Do I Have To Be Told That My Job Is Going To Use The Tip Credit To Pay Me Less?
Wage: Tipped Employees Attorney: One problem that many employers find themselves in is failing to provide notice that the employer intends to take a tip credit towards its obligation under the FLSA to pay its tipped employees minimum wage. An employer is required to provide written or oral notice to tipped employees of the following:
- The cash wage that your employer is paying you,
- the additional amount claimed by the employer as a tip credit,
- that the tip credit cannot be higher than the number of tips actually received,
- all tips received by tipped employee are to be retained by employee, except for when there is a valid tip pooling agreement
- the tip credit will not be applied unless the employee was informed of all of the above.
If the employer fails to inform the tipped employee of all of the above, the employer must pay the employee at least the higher of the federal minimum wage of $7.25 per hour or the Ohio minimum wage of $8.10 per hour, and tipped employee may still keep all tips.
Can My Job Force Me To Share Tips With Other Employees? Do I Have A Choice Whether Or Not To Be In A Tip Pool?
Wage: Tipped Employees Attorney: Another very common question tipped employees have is whether or not their tip pooling arrangement is valid. In many restaurants, tipped employees must give a portion of their tips to other restaurant staff members. The idea behind tip pooling arrangements is that many members of the restaurant staff contribute to the service of the restaurant’s customers, so they should also share in the tips.
Under a valid tip pooling agreement, the tipped employee should only be required to share his or her tips with other employees who customarily and regularly receive tips. So, what restaurant employees, other than servers and bartenders, customarily and regularly receive tips?
Many courts address this by asking two questions: (1) is the employee in the tip pooling arrangement paid less than minimum wage; and (2) does the employee in the tip pooling arrangement interact with customers? If the answer to either question is “no” then the tip pooling arrangement is not valid. Courts focus on the extent of interaction with customers. Servers, hostesses, bussers, and service bartenders are viewed to have sufficient interaction with customers.
Dishwashers, cooks, and janitors are not. Tip pooling arrangements that include employees without sufficient interaction with customers are not valid. Once a tip pool becomes invalid, you must be paid the full minimum wage and can still keep your tips.
Can My Manager Or The Owner Share In The Tip Pool? Do I Have To Give Part Of My Tips To My Boss Or The Manager If He Or She Also Bartends?
Wage: Tipped Employees Attorney: No. Recently, the United States District Court District of Maryland in Gionfriddo v. Jason Zink, LLC, considered these same questions. In that case, Defendant Jason Zink was the owner of two restaurants and was sued by several of his employees claiming that Zink improperly participated in the tip pool. In response, Zink asserted that he could participate in the tip pool because he was the primary bartender at each bar. Zink argued that bartenders are commonly considered tipped employees under the FLSA. But, the Court rejected this argument, holding that because Zink was considered an “employer under the FLSA, he could not possibly also be considered a tipped employee who could share in a tip pool … this Court need not evaluate the extent of Mr. Zink’s bartending activities because it would be [contrary] to the purpose behind the FLSA to simultaneously allow him to take tips from a collective tip pool that was set up to allow him to pay his employees at a rate substantially below the minimum wage.”
As such, Zink’s participation in the tip pool was unlawful under the FLSA and resulted in the tipped employees being entitled to full minimum wages. The Gionfriddo decision is not alone in holding that an owner or other manager cannot be part of the tip pool. As the Gionfriddo Court recognized, “every court that has considered the issue has unequivocally held that the FLSA expressly prohibits employers from participating in employee tip pools.”
Can I Be Forced To Pay For Customers That Walk Out Without Paying? Do I Have To Use My Tips To Pay For Dine And Dash Customers Or Broken Dishes?
Wage: Tipped Employees Attorney: The Department of Labor (“DOL”) has explored this issue and responded as follows: “Where deductions for walk-outs, breakage, or cash register shortages reduce the employee’s wages below the minimum wage, such deductions are illegal. Where a tipped employee is paid $2.13 per hour in direct (or cash) wages and the employer claims the maximum tip credit of $5.12 per hour, no such deductions can be made without reducing the employee below the minimum wage (even where the employee receives more than $5.12 per hour in tips).”
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If you suspect your wages are being infringed, it’s important to talk to an attorney.
DISCLAIMER: These answers do not constitute legal advice or guidance.