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.
Restaurant 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.
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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.
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.
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?
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