Tipped Employees

A Federal Appeals Court Has Taken Down the 80/20/30 Rule for Applying the Tip Credit

December 10, 2024 | Parks, Chesin & Walbert

Last month, an important federal court ruling wiped out a new U.S. Department of Labor Rule expanding salaried employees’ eligibility for overtime compensation by narrowing employers’ ability to apply certain exemptions. A few months earlier, a different federal court ruling from Texas also significantly impacted wage and hour law, but on a different set of employees. This ruling targeted a 2021 DOL rule regarding the tip credit. These rulings are crucial reminders that, especially under the current legal landscape, the rules and standards of wage and hour law are prone to change. With that in mind, you must work with a knowledgeable Atlanta wage and hour lawyer to ensure that your pay practices are compliant with (or taking advantage of) all the latest developments in the law.

The tip credit is the mechanism that allows employers to pay tipped workers a base hourly wage of as little as $2.13 per hour so long as the tipped worker’s base wage plus tips equals or exceeds $7.25 per hour. In 2021, the Labor Department established a rule saying that an employer could only apply the tip credit to workers if they spent 80% (or more) of their time doing tip-producing work (like serving tables in a restaurant, for example.)

The rule also established that these workers could spend no more than 20% of their time doing “directly supporting” work. (That latter category includes things like cleaning and setting tables or making coffee and tea.) An additional part of the rule said that workers could spend no more than 30 consecutive minutes doing this supporting work, or else the employer could not use the credit.

When Employers Can (and Cannot) Deduct Losses or Expenses from a Tipped Worker’s Pay Without Violating the FLSA

September 23, 2024 | Parks, Chesin & Walbert

Business owners face many business risks. One that is regrettably on the rise in the food service industry is the “dine and dash,” where customers consume food or drinks, and then leave without paying. The rise of this practice raises some important questions about who pays for dine-and-dashers’ purchases and when (or if) an employer can deduct the cost of a customer walkout from a tipped worker’s wages. As with any minimum wage or overtime compensation question, obtaining knowledgeable advice to ensure complete legal compliance is crucial. An experienced Atlanta wage and hour lawyer can give you the information you need to understand fully your rights and obligations.

While viral social media content and the FLSA do not regularly overlap, a recent TikTok video provides a real-life example of this issue of customer walkouts and deductions from a tipped worker’s income.

The September 8 video, released by a golf course beverage cart attendant, warned other service industry employees to be cautious when handing a customer a wireless device (such as an iPad or Android tablet) to complete paying for their purchases. Allegedly, a customer used trickery to dodge paying a $76 bill, a deceit the attendant did not discover until after the group was “long gone.”

What a Congressional Bill Could Mean to Georgia Employers When It Comes to FLSA Compliance… and the Penalties Attached to Violations

July 25, 2024 | Parks, Chesin & Walbert

Across the country, many state and local governments are enacting – or debating — legislation to combat wage theft. Another body considering statutory changes is the federal government, where a proposed bill would substantially increase the penalties on employers found to have violated the FLSA’s prohibitions against wage theft. Whether you are a worker who has been denied pay you were owed or yours is a business seeking to ensure statutory compliance, get the answers you need by consulting an experienced Atlanta wage and hour lawyer.

Governments that have recently enacted, or are debating, new wage theft laws include Oregon, California, Minnesota, New York State, and the City of Denver, to name a few.

The proposal pending in the U.S. House of Representatives, which has come up in each of the last two Congresses, is a bill called the “Wage Theft Prevention and Wage Recovery Act.”

Recent Actions by the U.S. Department of Labor Point to Ways Employers May Run Afoul of Rules Governing Tipped Worker Pay

June 21, 2024 | Parks, Chesin & Walbert

Many bartenders, restaurant servers, and others in the hospitality industry depend on tips for a substantial portion of their compensation. In these industries, minimum wage and overtime disputes are common, whether they arise from good-faith recordkeeping errors or intentional misconduct by employers. Whether you are an employer or a tipped employee, look to an experienced Atlanta wage and hour lawyer when you have questions about the laws and regulations regarding tipped work.

If you are a tipped employee or your team includes tipped employees, it is important to understand thoroughly the FLSA and the Labor Department’s rules regarding tipped workers.

The FLSA bars employers from paying tipped workers only in tips. Minimum wage law requires employers of tipped workers to pay those employees sub-minimum wages, but that sub-minimum floor is not zero. For states that do not have standards above the FLSA requirement, federal law controls.

Maintaining Independent Contractor Status Now that the U.S. Department of Labor’s New Rule Has Taken Effect

June 10, 2024 | Parks, Chesin & Walbert

Commentators sometimes cast independent contractor status as a tool for employers to exploit employees and avoid paying those workers properly. In reality, independent contractor status can provide substantial advantages to workers… and some prefer it. With the U.S. Department of Labor’s new final rule regarding employee-versus-independent-contractor status having taken effect on March 11, independent contractors and hiring entities may wonder what they can do to ensure compliance with the new rule. A good place to start is peaking to a knowledgeable Atlanta wage and hour lawyer.

As noted above, some workers firmly prefer independent status. Independent contractor status allows workers to set their own schedule/hours, control how they do their work, and, in many situations, not have the income limitations that salaried work does.

One industry with many independent contractors is real estate. According to the National Association of Realtors, around 89% of its members work as independent contractors.

The Federal Court Procedure for Terminating a FLSA Case Partially Resolved Via Settlement

May 18, 2023 | Parks, Chesin & Walbert

Currently, the law allows restaurant employers to pay employees a base rate below the mandatory minimum wage as long as those workers ultimately end up receiving total compensation that works out to be more than the minimum hourly requirement (which, here in Georgia, is $7.25.) If you find it necessary to pursue this kind of minimum wage lawsuit (or defend against one,) it’s important to recognize the many federal rules of procedure that may play a role in your case. Ensuring that the rules of procedure do not trip up your case (or your defense as an employer) is one area where a skilled Atlanta wage and hour lawyer can be invaluable.

Here’s a recent example from federal court minimum wage action to illustrate what we mean.

The plaintiffs were a group of servers at a high-end restaurant. Their employer charged customers a preset gratuity that it automatically added to diners’ bills and then split those “service charges” among the servers. In addition, the servers also received a base pay of $5.65 per hour.

The Importance of Attention to Detail, and Using Your Employer’s Lack of It to Your Advantage in Your FLSA Case

December 16, 2021 | Parks, Chesin & Walbert

An American psychotherapist became famous after he published a self-help book entitled Don’t Sweat the Small Stuff… and it’s all Small Stuff. While that may be great advice in terms of mental health, the exact opposite is often true in legal matters. Many times, the small stuff is the stuff most worth sweating, as something very small may make a very big difference in terms of success versus defeat. That’s why a knowledgeable Atlanta worker misclassification lawyer is so valuable to you, as your attorney will spot all of the small stuff that is most definitely worth sweating.

Here in Georgia, workers, when it comes to minimum wage and overtime, often rely on the protections written into federal law. With that in mind, even cases from outside Georgia may offer very useful insights for you and your minimum wage and overtime case.

A recent Fair Labor Standards Act case from North Carolina is a good example. The case involved an industry where minimum wage and overtime disputes are common: adult entertainment. The plaintiff was an exotic dancer at a club in the Raleigh, North Carolina area. Her lawsuit alleged that the club improperly classified her as an independent contractor when she really was an employee and, in the process, improperly failed to meet the overtime and minimum wage obligations of the FLSA.

Eleventh Circuit Upholds Lower Court, Denies Valets the Right to Sue over Alleged Unpaid Tips

July 7, 2017 | Parks, Chesin & Walbert

In an important recent ruling, the 11th Circuit Court of Appeals has affirmed the decision of an Atlanta-based federal District Court, denying an employee the opportunity to pursue a class action against her employer for keeping some of the employees’ tips. The key to the employer’s victory in both courts was the limitations on private lawsuits contained in the Fair Labor Standards Act’s language. Since that law only allowed private lawsuits in cases of unpaid overtime or failure to meet the minimum wage, neither of which occurred in this case, the employee had no legal right to pursue a private class action.

Safeguarding Tipped Employees

December 17, 2012 | Parks, Chesin & Walbert

The Fair Labor Standards Act (FLSA) outlines a number of requirements regarding the payment of employees who regularly receive over $30 per month in tips. According to these requirements, tips are to remain property of the employee and cannot be confiscated by an employer except in cases where a tip credit or tip pool is applicable.