Tipped employees are those who regularly receive more than $30 per month in tips. Tips are the sole property of employees. Employers, including supervisors and managers, are prohibited from keeping an employee’s tips.
Restaurants also may break strict rules regarding payment of tips by engaging in “tip skimming” and by not paying the proper minimum wage and overtime. Some restaurants have even paid less than the required cash wage for tipped employees, which is $2.13 per hour. Section 3(m) of the Fair Labor Standards Act (“FLSA”) permits an employer to take a “tip credit” toward its minimum wage obligation for tipped employees equal to the difference between the required cash wage (which must be at least $2.13 per hour) and the federal minimum wage (currently $7.25 per hour). Thus, the maximum tip credit that an employer can currently claim under the FLSA section 3(m) is $5.12 per hour (the minimum wage of $7.25 minus the minimum required cash wage of $2.13). Employers must provide notice to its tipped employees of their taking of this “tip credit.” This notice must be very specific. An employer who fails to provide the required information cannot use the “tip credit,” and therefore, they must pay the tipped employee at least $7.25 per hour in wages and allow the tipped employee to keep all tips received.
Don’t guess. Be sure. If you work in a restaurant and have questions about your pay and/or tips please contact the Class Action Practice Group at Saltz, Mongeluzzi & Bendesky, P.C. at 215-575-3985. The lawyers in the Class Action Practice Group will listen to your wage and hour issue and can evaluate your potential case under the FLSA and state law.