If you’ve worked in the food service industry before, you know that the holidays can be hit-or-miss when it comes to tips. I spent years in the industry at a variety of different food establishments, working through many Thanksgivings, Christmases, and New Years. I would hope on these days that it would be like any other when I could expect to bring home the usual amount of tips from the night. If I got lucky, someone would be in high holiday spirits and extra generous; and if I was unlucky, someone would think leaving me a Christmas card made up for the $0.00 left on the “tip” line of the receipt (totally happened, and they didn’t even leave a message inside!).
But, of course, that’s the luck of the draw when it comes to the food service industry and being a tipped worker. There’s a lot that can be said about what needs to be changed or fixed in the industry, and you likely have your own opinions on whether tipping should even be a thing. However, this blog today is for my tipped workers who may not know all the laws surrounding what your employer can or can’t do with the tips you earned.
Back when I was a server and bartender, I never really thought much about the tip pool or tipping out. It was such customary practice: I’d count up my tips at the end of a shift, report that, and then a percentage would come out to be shared among the other workers. I’d pocket whatever bills I got at the end of a shift and moved on until the next, praying it wasn’t another “clopen” or back-to-back doubles.
It was just so routine to me after years of being a tipped employee that once I got to law school and learned about a little thing called the Fair Labor Standards Act (“FLSA”), I was surprised there were so many laws I never knew about surrounding tips. Sure, I knew that the reason I was paid $2.13 at nearly every place I worked was because the tips were supposed to make up the remaining $5.12 of the Texas minimum wage, but I didn’t know this was called a “tip credit.” This tip credit then affects who can participate in a tip pool.
Employers can make it mandatory for tipped employees to participate in the tip pool, but not everyone who works in the business is entitled to be tipped out. For instance, if an employer claims a tip credit (that is, they pay their tipped employees less than $7.25 and hour), they must limit who gets a share of the tip pool to only tipped employees. But who is a tipped employee? Busboys are just as busy on the floor as waiters and barbacks are just as instrumental in getting you the newest Tiktok cocktail craze made as the bartender themselves. Yet, they aren’t the ones physically receiving the tip. The Department of Labor recognizes tipped employees as waiters, bellhops, counter personnel who serve customers, bussers, barbacks, or service bartenders. That means back-of-house workers (dishwashers, cooks, etc.) or other non-tipped employees are only entitled to a portion of the tip pool if the employer doesn’t take a tip credit (i.e., pays everyone the full minimum wage).
However, under no circumstances are employers, owners, managers, or supervisors allowed to be included in the tip pool. This was made clear this year in Texas when news broke that Black’s Barbecue had been illegally including their managers in the tip share. The Department of Labor launched a federal investigation into Texas’ oldest BBQ joint beginning in 2019, and it was only in September of 2022 that the Department reported all $230k in illegally shared wages had been recovered. The Austin American-Statesmen reported that Kent Black, one of the restaurant chain’s owners, said, “We’re barbecue experts; we’re not payroll experts. We weren’t closely following that, and apparently our payroll company did not pick up on that.” It’s upsetting, but also unsurprising when, as the American-Statesmen reports, “In the past decade, the Labor Department’s records show the food service industry to be one of the most consistent ‘high violation’ wage environments for workers.”
Rob Wiley, P.C. may not be barbecue experts (although we aren’t backing down from the challenge!), but we are labor and employment law experts. If you feel you aren’t being paid your rightful wages and benefits, consult one of our attorneys.