March 9, 2023 - Posts

Paid With Tips? What Servers & Bartenders Should Know

Federal and state laws protect the wages and tips of employees working in the food and beverage service industry. Still, employers sometimes deny them the wages and tips they are owed. Here are some ways employers violate the rights of servers, bartenders, and other tipped employees under federal law:

(1) Taking a “tip credit” toward minimum wage, but not meeting the law’s requirements to be able to use the “tip credit”

Under the Fair Labor Standards Act (FLSA) – the federal law setting minimum wage and overtime requirements – the federal minimum wage for covered non-exempt employees is $7.25 per hour (and $10.88 per hour overtime wage). However, under the “tip credit” provision of the FLSA, 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 may owe its tipped employees the full minimum wage.

The rules employers have to follow to take the tip credit are:

• Employers must inform tipped employees of these 5 key things:
  • (1) what their hourly rate will be (for example, telling the employee they will be paid $2.13 per hour);
  • (2) how much tips the employer is using per hour as a “tip credit” to meet the minimum wage (for example, a tip credit of $5.12 per hour, which, in this example, is the $7.25 minimum wage – $2.13 hourly pay);
  • (3) that the amount of the tip credit cannot be more than the amount of tips the employee actually received or took home;
  • (4) that employees are entitled to keep all of their tips (except for valid tip pools that only include other tipped employees); and
  • (5) that the employer’s ability to use the tip credit does not apply if employees do not receive this notice (meaning you, the employee, are not informed of these 5 things).
• Employers must pay employees at least $2.13 per hour (or $5.76 per overtime hour).
• Employers must let employees keep their tips (except for valid tip pools that only include other tipped employees).
• Employers must not keep any of their employees’ tips or let managers or supervisors keep any of them.

Some of the ways businesses violate these rules for tipped employees are:

• Failing to tell tipped employees of the 5-part notice mentioned above.
• Keeping part of the tips for the business (or using them for business expenses).
• Letting managers and supervisors keep part of the tips.
• Requiring servers or bartenders to share tips with employees who have little or no interaction with customers (like dishwashers, cooks, expediters, bar-backs, etc.).
• Taking a greater “tip credit” than allowed by paying less than $2.13 per hour (or $5.76 per overtime hour).
• Deducting money from tipped employees’ pay for uniforms, broken dishes, cash register shortages, and unpaid customer meals and bar tabs.
• Making tipped employees perform large amounts of non-tip-producing duties (sometimes called “side work”) while paying a tipped hourly rate less than $7.25 per hour, including when they are not serving customers. For example, a bartender clocking in to work 1 hour before the bar opens to customers to stock the bar, cut fruit, batch drinks, polish glassware, etc.
• 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 break the rules and benefit at the expense of some of their hardest working employees. If you have experienced any of these issues, call us for a free and confidential consultation at 615-244-2202.

(2) Failing to pay tipped employees for all hours worked.

The FLSA requires employers to compensate workers for all hours worked. Specifically, employers must pay for all job duties that constitute an “integral and indispensable part of the principle activities” for which employees are employed. For many tipped employees, this includes training, attending pre-shift meetings or workshops, preparing a work station, doing side-work, and checking out. Some employers require their staff to clock out after serving their last customer but before finishing mandatory side-work like cleaning, rolling silverware, polishing glassware, etc. Such practices are illegal.

Here are some examples of work you must be paid for:

• Attending training meetings
• Studying for and taking food and/or beverage menu tests
• Pre-shift meetings
• Workshops
• Side-work, including opening and closing work
• Checking out at the end of your shift

If you have been required to perform activities related to your job without pay, call us for a free and confidential consultation at 615-244-2202.

(3) Keeping tips for any reason or letting managers and supervisors keep tips.

The FLSA prohibits employers from keeping any of the tips earned by their employees or letting managers and supervisors keep them, whether or not the employer takes a tip credit. In other words, businesses and their owners, managers, and supervisors are not allowed to keep any tips. Some employers keep tips to share with managers, while others use them to pay for business expenses like inventory services, unpaid customer checks, spillage/breakage, etc.

When an employer violates this provision, employees are also allowed to seek the tips the employer unlawfully kept. If you believe this has happened to you, call us for a free and confidential consultation at 615-244-2202.

What can I do if I think my employer has not paid me properly?

Call us! We have represented hundreds of tipped employees who have been the victims of unlawful practices and successfully recovered millions of dollars. If you believe any of the practices above apply to you or believe your employer has not paid you all the wages you are owed, please call our office at (615) 244-2202 for a free and confidential consultation.