Atlanta Employment Attorneys Blog
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.
Georgia and all its neighboring states except Florida follow the federal standards. That means, in Georgia, the minimum direct wage for tipped workers is $2.13 per hour. (In Florida, the minimum wage is $12 per hour, not $7.25, and the minimum base wage for tipped workers is $8.98 per hour, not $2.13.)
Employers Bear Responsibility for Ensuring Compliance
One way an employer can run afoul when paying tipped workers is a lack of direct oversight of its pay practices.
Last fall, the U.S. Department of Labor’s Wage and Hour Division (WHD) took action against a Florida pizzeria for FLSA violations. Specifically, the division’s investigation found that the restaurant’s servers received pay solely in tips, with no base cash wage. The investigation ended with the employer, located in suburban Orlando, paying more than $120,000 in back wages.
The employer asserted that it outsourced payroll services to a third-party vendor and that the provider did not raise any red flags about the pizzeria’s pay practices. However, as the WHD noted, when an employer uses a third-party payroll provider, the employer is still the one with the ultimate responsibility “for making certain workers are getting paid correctly.”
Tip Pooling and Sharing Tips With Managers
Also, be aware that federal law does not allow employers (or managers or supervisors) to keep a cut of tipped workers’ tips. This prohibited practice was the subject of two Labor Department investigations from Oregon earlier this year. In the case of a Portland pizzeria, the problem was tip pool sharing. The employer pooled workers’ tips – which is allowed under federal law and the Labor Department’s regulations – but distributed a portion of that pool to managers, which is a violation. When an employer gives managers and supervisors a cut of workers’ tip pools, the federal government considers it a failure to pay workers 100% of the tips they earned, which is a form of wage theft.
In the other Oregon case, the employer split tip pools between its tipped workers, assistant managers, and shift leads. The employer contended that the assistant managers and shift leads were “hourly, entry-level, non-exempt” workers legally entitled to a share of the tips. Generally, managers and supervisors can only keep the tips they receive directly from patrons. For example, a restaurant manager who covers a staff shortage by serving diners at four tables can keep the tips he/she receives from those four tables, but generally cannot share in the other servers’ tip pool.
The Minimum Standards to Qualify as a ‘Tipped’ Employee
Finally, employers should ensure that all the employees they are paying under the rules for tipped workers qualify. The FLSA says that tipped employees regularly receive more than $30 a month in tips. If a worker doesn’t clear that threshold, they do not qualify as a “tipped” employee under the law and are entitled to be paid under the standards for non-tipped employees.
A significant portion of FLSA litigation and WHD investigations relate to the way tipped employees get paid. As a worker, you want to be sure you are getting everything you earned. As an employer, you want to ensure you are in complete compliance with the law and the DOL’s regulations and are not at risk of a lawsuit or a DOL investigation. The skilled Atlanta wage and hour attorneys at the law firm of Parks, Chesin & Walbert can help. Contact us today at 404-873-8048 or through this website to schedule a consultation and learn more about your rights and responsibilities.