In 2018, Congress added a provision to the Fair Labor Standards Act prohibiting employers from retaining employee tips or allowing managers or supervisors to participate in a tip pooling arrangement. Today, the U.S. Department of Labor announced a new final regulation in which the DOL asserts authority to penalize employers up to $1,100 per violation
New Tip Pool Rules – Changes to the FLSA and DOL Guidance
If you’ve been paying attention to the news relating to wage and hour law (and really, who isn’t?), you may recently have heard quite a bit about new federal rules on tipped employees, and more recently Congress stepping in with new legislation. There has been a lot of rhetoric on all sides, though not always
Explanation of the DOL’s Proposed Rules on Tips
There’s been plenty of press this week regarding the U.S. Department of Labor’s proposed rules governing employer treatment of tips. Commentators are debating whether the proposed changes are a sensible return to the four corners of the Fair Labor Standards Act or a cash-grab for the restaurant industry at the expense of workers. We’ll leave
Here’s a tip: Don’t skim from employee tips
Hospitality industry employers take note: If you claim a “tip credit” toward the minimum wage for any of your employees, you need to make sure that all tips are properly distributed to employees. A recent case from the Fifth Circuit Court of Appeals involving a Texas restaurant chain illustrates the hazards of making a mistake with the tip credit rules. Steele v. Leasing Enterprises, Ltd. (.pdf)
Here’s a summary of this cautionary tale:
Tip Credit Background
Under the Fair Labor Standards Act, employers are require to pay most employees at least $7.25 per hour. The FLSA allows tips received by employees to count for up to $5.12 of this total, meaning that an employer can pay tipped employees as little as $2.13 per hour so long as their tips are sufficient to make up the difference between their hourly wage and the federal minimum wage. But there are some restrictions. Employers can take advantage of this “tip credit” only if three conditions are met:
Continue Reading Here’s a tip: Don’t skim from employee tips
The “Winner” and Other Losers: What “Winning” That Wage & Hour Suit Might Get You
One of the many songs written by Shel Silverstin became a hit for Bobby Bare back in 1976, and the title of Bare’s album that appears in the headline of this post. “The Winner” tells the story about a man who “won” every fight he had ever fought—with the broken bones, glass eye, arthritis, dislocated knees and more to show for it. Just as in the world of Shel Silverstein’s lyrics, being “The Winner” in a wage and hour lawsuit isn’t always that great.
Before the Labor Day holiday, I read on Twitter (by the way—are you following @WageHourInsight yet?) about the supposed “success” a restaurant had in defending its wage and hour practices at trial. I did a double-take. After reading the Southern District of New York’s opinion in Mendez v. International Food House, I would bet that, like the “Tiger Man McCool” in Shel’s hit song, the restaurant isn’t feeling much like “The Winner” now. Litigating a wage and hour case through trial is rarely going to be a victory by any definition after you consider the costs and time expended (even assuming you prevail).
Continue Reading The “Winner” and Other Losers: What “Winning” That Wage & Hour Suit Might Get You
Ongoing Confusion about Tips, Even from the White House
Recently, I explained that revising the FLSA regulations will not be easy, and highlighted tip credits as one such area in particular. In my last post, I discussed yet another case involving the miscalculation of wages for tipped employees. This time, a large restaurant operator coughed up $2.86 million to settle a lawsuit alleging a
The 20% Rule for Tips is Back in the News
We’ve covered tips and tip credits at length in the past Another Celebrity Chef Runs Afoul of Tip Pooling Rules
Shortly after my co-author, Bill Pokorny, wrote about celebrity and Iron Chef Mario Batali’s multi-million dollar settlement of a class action tip pooling lawsuit, another celebrity chef here in Chicago was sued for violating tip pooling laws. In March 2012, a lawsuit was filed against Master Chef Graham Elliot by 14 former employees over tip
Mario Batali Restaurants Settle Tip Pool Lawsuit For $5.25 Million
The latest news in celebrity chef wage and hour litigation is that eight New York restaurants owned by Mario Batali have agreed to settle $5.25 million to settle a class action lawsuit alleging that they illegally withheld tips from hourly service workers. The proposed settlement, which must still be approved by the court following a
Restaurant Association Sues to Block Tip Credit Rules
On April 5, 2011, the U.S. Department of Labor published new final regulations that among other things require employers to give new detailed notices to tipped employees in order to credit tips toward the minimum wage. The new regulations took effect on June 5, 2011. Yesterday, June 16, 2011, the National Restaurant Association, the