Tipped Employees

Deciding Who Should (and Who Should Not) Share in an Employee Tip Pool

October 24, 2025 | Parks, Chesin & Walbert

Restaurant work is often fast-paced and can be hectic. Providing quality service to customers requires a high degree of teamwork and can demand that workers wear many “hats.” This may potentially create some gray areas when it comes to tip pools. If you have questions about who should — and should not — participate in a tip pool, you should consult with a knowledgeable Atlanta wage and hour lawyer.

One example of this comes from a letter to the Wage and Hour Division (WHD) from earlier this year. In the scenario, the business was a “quick service restaurant.” At the restaurant, employees worked on a line preparing and assembling the food the customers picked out, then the customers paid for their food at the end of the line before finding a table in the dining area. (Fast-casual Mexican establishments like Chipotle and Qdoba are examples of a similar type of quick service restaurant.)

At the restaurant, all team members received a cash wage at or above the applicable minimum wage. The restaurant nevertheless allowed customers the option to leave a tip, either on their credit cards or in a tip jar. The restaurant subsequently pooled the tips and split the pool among its employees.

How to Decide Whether a Worker Should (or Should Not) Be Included in a Tip Pool

October 10, 2025 | Parks, Chesin & Walbert

One of the thorniest areas of Fair Labor Standards Act law concerns tipped employees. Disputes involving tipped workers are among the most frequent to arise. One area where difficulties may emerge is when an employer establishes a mandatory tip pool. While some workers, like servers, might obviously be included in a tip pool, other employees’ jobs might make their status less clear. If you are an employee or an employer with a tip pooling question, be sure you get the knowledgeable information you need by speaking to a knowledgeable Atlanta wage and hour lawyer.

A recent Wage and Hour Division (WHD) opinion letter is a reminder that, when it comes to mandatory tip pools, the key is not just what task an employee does, but the context in which they perform it.

The employer was a seafood restaurant that offered freshly shucked oysters from an oyster bar. At this restaurant, the employer stationed the oyster shuckers behind the eatery’s bar alongside its bartenders, where they engaged “with customers by sharing and detailing oyster offerings, making suggestions regarding the oyster offerings, and fielding other questions about the different options, while preparing the oysters for and in front of the customers.”

What a Brief Dive into Reddit Can Teach About the FLSA and the Requirements Surrounding Employers’ Handling of Pooled Tips

May 16, 2025 | Parks, Chesin & Walbert

The Reddit platform can be a source of amusement and distraction. Occasionally, it can also provide an opportunity for education. Take, for example, a post from earlier this week centering around a pay practices problem and tipped employees. While wholly unverified, the post highlights an example of how employers can violate the law if they are not mindful of the Fair Labor Standards Act’s requirements and why they should consult an experienced Atlanta wage and hour lawyer if they have any questions about handling employees’ tips.

According to the employee, her manager sent a group text message addressed to “all employees.” The manager, “Kelly”, informed her team that the “pooled tips we’ve gotten… won’t be distributed. Janice’s mom just passed away and they could use it more than we do at the moment.”

After reading that, many might wonder, “Can they do that legally?” In short, the answer is “probably not.”

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.