Lawyers and Settlements
What are you looking for?
Home Page >> News Articles >> Tip Sharing Lawsuits Investigated

Tip Sharing Lawsuits Investigated

. By
Dallas, TX: It is no secret that many people who work in the food service industry rely on tips to supplement their often meager wages. In some states, where it is legal for restaurant owners to pay less than minimum wage, those workers depend very heavily on their tips to make a living. However, many restaurants and other food service establishments require their employees to share tips with workers who are actually considered management. Employees at these restaurants are investigating lawsuits against their employers, alleging that forced tip sharing with management violates labor codes.

TipsRestaurant employers in some states rely on their employees' tips to supplement their income. It is, in some states, perfectly legal to pay employees less than minimum wage, provided the employee receives enough in tips to make up the difference. Using this so-called "tip credit" means that the employer pays less in wages and therefore has fewer expenses. However, some of these employers are then using the employees' tips to subsidize their managers' wages. This is simply not right. These employers already get a break by not having to pay employees minimum wage, why should the already underpaid employees have to support the wages of management employees?

The practice is actually more common than many people think. However, employees are fighting back against the unfair policy by filing lawsuits against their employers. In 2007, waiters at the Old Homestead Steak House in New York filed a $1 million lawsuit against the restaurant, alleging they were forced to share their tips with management and other employees. The defendants, who were meant to share the tip pool amongst themselves, alleged that even the restaurant's general manager profited from sharing the waiters' tips.

In 2006, six waiters at Jing Fong, a popular restaurant in New York's Chinatown, filed a lawsuit against the restaurant alleging that management violated minimum-wage laws by using waiters' tips to pay other employees. Among the allegations:

• That the restaurant used money from the tip pool to pay employees who push the dim sum carts (while not paying those employees an hourly wage);

• That the restaurant took up to 35 percent of the automatic service charge added to bills for large groups; and

• That around $2,500 a week was taken from the tip pool for inappropriate uses.

Employees in the food service industry rely heavily on their tips to make ends meet. Furthermore, customers in food establishments generally assume that the tips they leave are going to the people who served them in the restaurant—they do not expect that a portion of the tip they leave for their waiters will be given to management and other restaurant supervisors.

Many more waiters are now investigating whether or not their employer's tip sharing policy violates labor laws. Furthermore, the courts are siding with employees when employers have forced them to share tips with management and other employees who work in a supervisory capacity. If you believe you have been unfairly forced to share your hard-earned tips with management and other supervisors, contact a lawyer who can determine if you are eligible to join a lawsuit.

READER COMMENTS

Posted by
G. Reed
on
The U.S. Department of Labor has issued a fact sheet that is creating confusion over tip pools. The fact sheet states, "employees cannot be required to pool tips with employees who do no customarily and regularly receive tips". What the fact sheet suggests is that employees can be required to pool their tips with employees who customarily and regularly receive tips, however, there is no law stating this alleged fact. The DOL's fact sheet is clearly refering to 29 USC section 203(m), which states, "nothing in this section shall be construed to prohibit the pooling of tips among employees who customarily and regularly receive tips".

The problem with the DOL's fact sheet interpretation of section 203(m) is, it's based on the premiss that tip pooling is an allowance for employers rather than an allowance for those employees who customarily and regularly receive tips. Federal regulations totally discredit and condradict the notion that section 203(m) is creating an allowance for employers in concerns to the tips their employees receive from customers. CFR 531.52 states that "tips are a sum presented by a customer" which contradicts the notion that section 203(m) is creating an allowance for employer to redistribute the customer's tip and thus present tips to whom ever they want to include in their required tip pool. CFR 531.52 goes on to state that "only tips received as money belonging to the employee" may be counted in applying the provision of section 203(m), which again contradicts the notion that employers may require that employees pool their tips the way their employer, or for that matter, federal laws allegedly require tips be pooled. CFR 531.54 states that tip pooling is where employees "mutually agree" on the basis by which their tips will be redistributed through a tip pool, once again contradicting the notion that employers are allowed to pool tips among those employees whom federal laws suggest tips may be pooled among.

Clearly federal laws do not attempt to govern who may or may not be included in a tip pool. The Department of Labor's fact sheet cannot be suggesting that certain types of employees, those who receive tips customarily and regularly receive tips, may be included in a tip pool, due to the fact that their regulations state clearly that nothing is to prohibit the pooling of tips and the pooling of tips is clearly explained as where employees mutually agree on the basis by which their tips will be redistributed through furtherance of a tip pool. Likewise federal laws do not attempt to govern who can or cannot receive a share of an employee's tips due to the fact that federal regulations explain clearly that section 203(m) is in concerns to tips belonging to the employee.

The fact that tips are clearly defined for the purposes of applying section 203(m) as money belonging to the employee, rules out any notion that the statute is attempting to govern who can or can't be included in the pooling of tips. Only the employee mutually agreeing to pool tips is authorized under federal law to govern who may or may not be included in his or her tip pool. "Only tips received as money belonging to the employee may be counted in applying the provisions of section 203(m). CFR 531.52 clarifies the fact that section 203(m) is not attempting to govern who may or may not be included in a tip pool. The DOL's fact sheet is clearly in error.

If section 203(m) where suggesting that tip pooling is restricted to certain employees, it would include provisions for what portion of the pooled funds each types of employee was entitled to receive from the pool. Federal laws are silent on what portion each tip pool recipient is entitled to. The reason being, federal regulations clearly leave such determinations up to the employee who such tips where presented and clarify such by stating, "Only tips received as money belonging to the employee may be counted in applying the provisions of section 203(m). Federal laws cannot define what portion each employee included in a tip pool is entitled to just as federal laws cannot define who may be included in a tip pool. Tips are defined as money belonging to the employee.

Posted by
G Reed
on
Forcing an employee to share tips with anyone is illegal.

Tip pooling is defined under CFR 531.54 as where employees "MUTUALLY" agree on the basis by which tips will be redistributed through furtherance of a tip pool.

Federal law, section 203(m), states that nothing in this section shall be construed to prohibit the "pooling of tips" among employees who customarily and regularly receive tips".

Section 203(m) is not suggesting that employers cannot be prohibited from requiring tip pooling among all those employees who "customarily and regularly receive tips.

Instead, section 203(m) is stating that nothing in this section shall be construed to prohibit employees who customarily and regularly receive tips from mutually agreeing on the basis by which their tips will be redistributed through furtherance of a tip pool.

The pooling of tips that section 203(m) explains cannot be prohibited is the pooling of tips where employees are free to mutually agree on the basis by which their tips will be redistributed. Tip pooling, as defined under federal regulations, does not include employer required tip pools due to the fact that employer required tip pools prohibit employees from mutually agreeing on the basis by which their tips will be redistributed. With employer required tip pools, employees are required to pool their tips on a basis that some may not be in mutual agreement with.

This is why there are so many lawsuits concerning employer required tip pools. Many employees are not mutually agreeing to redistribute their tips the way their employer is requiring that tips be redistributed. Thus lawsuits abound.

Posted by
Jane Wallace
on
What is the highest percentage of tips earned by a waiter/waitress that can legally be taken from their tips for tip out? Is it 15% in Virginia?

ADD YOUR COMMENT ON THIS STORY

Fields marked * are mandatory. Please read our comment guidelines before posting.

*Name:

Note: Your name will be published with your comment.

*Email Address:

Your email will only be used if a response is needed.

*Your Comment:


Click to learn more about LawyersandSettlements.com


Legal Services:

Facebook



 
FAQ | TOS | Privacy | Disclaimer | About Us | Contact Us | Press | Advertise | Member Login | Jobs | Site Map | View Mobile Website |


Better Business Bureau   CAALA   Best of the Web Approved   Public Justice


This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License © 2001-2014 Online Legal Media. All rights reserved.