Atlanta Overtime Lawyers Blog
“Restaurant industry employers must know and comply with federal requirements to claim the tip credit,” says the Department of Labor (DOL). The DOL recently found a restaurant in violation of the federal tip pool regulations that protect tipped employees’ earnings. In the case, the restaurant required the tipped employees to share their tips illegally which invalidated the restaurant’s claim to a tip credit.
Restaurants are permitted to claim a tip credit for its tipped employees. This means that a restaurant may pay a tipped employee $2.13 per hour plus tips. However, there is a federal regulation on how the tips are distributed to other restaurant employees. If a restaurant requires a tipped employee to share their tips with non-tipped employees like back of house employees or management employees, it invalidates the tip pool and tip credit. This means the restaurant owes the employee minimum wage (minus the $2.13 already paid) and overtime pay.
Unfortunately, illegal tip sharing, invalid tip pools, etc. are very common in the restaurant industry. Restaurants illegally use the money to pay other workers’ wages. The DOL noted that the restaurant industry struggles to find workers to fill jobs. However, it needs to recognize that it must follow the law with respect to tipped employees and protect their wages from illegal wage theft through forcing them to share their tips with non-tipped workers.