Under the Fair Labor Standards Act (FLSA) – the federal law setting minimum wage and overtime requirements – restaurants, bars, and other businesses that employ tipped workers, are permitted to pay their tipped employees less than the federal $7.25 per hour minimum wage as long as they follow certain rules. If a business does not follow these rules, then it owes its tipped employees the full minimum wage.

Two rules businesses must follow, but often break are:

1. Businesses must pay those employees at least $2.13 per hour, and the employees must earn enough tips to add up to the full $7.25 per hour minimum wage. In other words, their total tips must work out to at least $5.12 per hour.
2. If the businesses require employees to share tips with other employees, then those tips can only be shared with other employees who “customarily and regularly receive tips.” In other words, tips can only be shared with other employees who earn tips and interact directly with customers. The business and its managers are never allowed to keep any part of tipped employees tips.

Some of the ways businesses violate these rules are:

1. Requiring servers or bartenders to share tips with employees who never interact with customers, like dishwashers, cooks, expediters, bar-backs, etc.
2. Keeping part of the tips for the business or its managers.
3. Deducting money from tipped employees’ pay for uniforms, broken dishes, cash register shortages, and unpaid customer meals and bar tabs.
4. Not paying additional wages when the tips earned are not enough to make up the difference between the lower tipped hourly rate and the full $7.25 per hour minimum wage.

These are just some of the ways businesses can ignore the rules to take advantage of some of their hardest working, but frequently lowest paid, employees. The U.S. Department of Labor has additional helpful information here.

These unlawful practices can cost tipped employees hundreds or even thousands of dollars. For example, in one such case against a Red Robin franchisee in Pennsylvania, where the tipped workers alleged they were required to share tips with cooks, dishwashers, and janitors, the parties ultimately reached a $1.3 Million settlement. Ford, et al. v. Lehigh Valley Rest. Group, Inc., No. 3:14-cv-227-JMM (M.D. Pa.).

We represent tipped employees who have been the victims of unlawful practices like these. Check out the coverage of one of our recent case on behalf of servers and bartenders at Nashville’s Downtown Sporting Club:

If you are a tipped employee and believe you have not been properly paid, please call our office at (615) 244-2202 for a free and confidential consultation.