Restaurants regularly cheat tipped employees out of wages. In an effort to control labor costs, restaurants sometimes shave overtime hours or require employees to work off the clock. One of the more frequent violations is improper tip pooling.
Under the Fair Labor Standards Act, most employers are usually required to pay employees at least $7.25 per hour. Restaurants and other employers, however, can take a tip credit to satisfy their minimum wage obligation for tipped employees. To take the tip credit, the restaurant must pay a cash wage of at least $2.13 per hour and it must either: (a) allow the tipped employee to keep all of the tips; or (b) have a valid tip pooling arrangement. The restaurant also must inform its employees about the tip-credit provision of the FLSA.
Many restaurants require its servers to participate in a tip pool. Oftentimes, the servers are required to pay the restaurant a certain percentage of their gross sales at the end of each shift. Depending on what the restaurant does with this money, the tip pool may violate the FLSA.
The restaurant CANNOT require tipped employees to share tips with non-tipped employees like cooks or dishwashers. The restaurant (or its owner) also cannot participate in the pool or take money from the tip pool to fund employee-of-the-month programs. Running an illegal tip pool destroys the tip credit, and restaurants have been forced to pay millions of dollars to their servers after being caught running an illegal tip pool.
If you have questions or feel that you’ve been cheated out of your proper wages contact us at (855) 825-5916.