Provide Tipped Employees with Adequate Written Notice
By Luis J. Gonzalez Attorney Litigation Practice & Alcohol Beverage Team, Holland & Knight | December 18, 2016
Complying with the Fair Labor Standards Act (FLSA) and the Department of Labor's (DOL) regulations for tipped employees continues to present challenges for hoteliers and others in the hospitality industry. While recent attention has been paid to proper tip pooling practices (employers requiring certain tipped employees to chip in a portion of their tips, which are then divided among a group of employees), equal attention must be given to the FLSA's mandatory notice provision to tipped employees.
A continuing trend in wage and hour lawsuits stems from the employer's failure to give the tipped employee the required notice. When such a failure occurs, the employer may be liable for back pay, liquidated damages, and the employee's attorneys' fees and costs.
Who Are Tipped Employees Under the FLSA?
Under the FLSA, a "tipped employee" is one who is engaged in an occupation in which he or she customarily and regularly receives more than $30 per month in tips. Tipped employees typically include waiters, waitresses, bellhops, counter personnel (who serve customers), bussers, and bartenders. Tipped employees must be paid the required minimum wage - in addition to any tips earned - even if the employee's weekly tips alone, when divided by the number of hours worked, exceed the required minimum wage.
The minimum wage varies by state and cannot be less than the federal minimum wage. It is important to note that under the current DOL regulation, an employer is prohibited from using an employee's earned tips for any reason - with a few exceptions. Therefore, where a tipped employee receives the federal minimum wage of $7.25 per hour from the employer plus tips, the employer cannot require the employee to turn over the tips to the employer. (The application of this restriction has been called into question by various courts interpreting the FLSA.)
Exceptions to FLSA Requirement That Tipped Employees Keep All Tips