The hospitality industry is particularly susceptible to minimum wage violation because of the unique compensation methods used industry wide. Minimum wage violations can result in potential civil litigation which can be both costly and time consuming for an employer. As a result this article attempts to highlight various issues surrounding minimum wage compliance.

Generally, the Fair Labor Standards Act (FLSA) establishes minimum wage regulations affecting both full-time and part-time employees. Workers covered under the act (which includes bartenders, servers, valet personal etc.) are entitled to a minimum wage rate of $5.15 an hour.

Typical compliance issues include: (1) failure to maintain records, (2) illegal deductions from pay for items like cash register shortages, uniforms, errors, bad checks etc. (3) insufficient tips to make up the difference between the employer's direct wage obligation and the minimum wage (4) employees receiving tips only and (5) sharing a portion of tipped employees' tips with employees who are not eligible because they do not normally receive tips.

Consequence of a Violation

Where an employee has been underpaid in violation of federal law, the Department of Labor has the authority to recover back wages administratively or through court action. Violations may result in either civil or criminal action. In ...