The restaurant industry is known for stealing hard-earned tips from its employees. This practice has been going on for years, yet it continues to be a paramount issue in the industry. As a restaurant employee, you may have asked yourself the following question because you have seen it done time and time again: Can my manager take my tip? Am I obligated to pay for a walked tab? Do I have to share my tip with cooks? The answer to all of these questions is likely no.
The answer to this question is no. Federal labor laws prohibit employers from restraining, interfering with, or coercing employees who collectively participate in activities related to the terms and conditions of their employment. Those Terms and conditions cover a broad range of topics, like employees discussing wages, hourly rates, salaries, bonuses, commissions, and any other form of payment. For that reason, an employer cannot tell its employees not to discuss their pay amongst themselves. Otherwise, that would be a violation of the National Labor Relations Act (NLRA). And it does not matter if the employer has a union. Both unionized and non-unionized employees are protected.
The time a Texas employer has to pay their employees their final paycheck depends on the circumstances surrounding the employee’s separation. There is no federal employment law that mandates an employer provide their employee with their last paycheck immediately; however, the Texas Payday Law provides employers with specific requirements.
Texas Payday Law governs all Texas businesses regardless of their size, excluding employers at the federal, state, and political subdivision level. Anyone who performs a service for compensation is an employee, except independent contractors and close relatives of the employer. Typically, unless there is a written agreement, employers must pay their employees in United States currency and deliver them their funds directly during working hours or through direct deposit. Employees have 180 days from the date their wages were due to file a claim for unpaid wages with the Texas Workforce Commission.
When an employee quits or is constructively discharged from their employment, the employer must pay him or her their final wage by the next regular payday. In instances where an employee receives paychecks on a monthly cycle, they must wait until the next month’s due date to obtain their final wage. If an employer terminated an employee, either by firing or laying them off, the employer must pay the employee within six days of their discharge.
The Fair Labor Standards Act (FLSA) establishes specific standards for part-time and full-time employment. The FLSA applies to private, state, and local, and federal government employees in Texas. According to the Texas Workforce Commission, this federal act covers minimum wage, overtime pay eligibility, and record keeping.
Although the FLSA covers some critical employment issues, unfortunately, several employment practices are not included. Generally, under Texas law, employers are not required to provide pension plans to their employers. Further, Texas employers do not need to give raises unless there has been an increase in the minimum wage. The FLSA also does not require employers to pay their employees extra pay for holidays or weekends. Similarly, employers do not have to pay shift differentials; meaning employers do not have to provide extra compensation for undesirable shifts.
Employee Breaks Under the FLSA
In today’s society, more people realize the value in maintaining a manageable work-life balance. And with healthcare costs continually on the rise, now more than ever prospective employees are looking beyond a position’s salary when seeking employment. Because of this, employers realize they must provide a comprehensive and attractive benefits package to recruit and retain quality employees.
A major issue for many employees is an employer’s policy for personal time off (PTO). Paid time off, or personal time off, is generally accrued as an employee works. While employers often allow employees to use PTO for the year before they actually accrue it (to avoid everyone using their PTO at the end of the year) many employees accrue more PTO than they use. This often results in an employee having a surplus of PTO.
When it comes time to leave a job, many employees wonder whether they must be paid out for their remaining unused PTO. Given that many employees carry large balances of PTO, the payout an employee receives upon their termination can be considerable. Employers may try to limit the amount of PTO they pay an employee upon termination; however, this is not always allowed.
As we have noted in previous blog posts, the Fair Labor Standards Act (FLSA) (the “Act”) is a federal law that guarantees Texas employees certain workplace rights. Among those are the right to be paid at or above the federal hourly minimum wage and the right to collect overtime pay for any hours worked over 40 per week. While the FLSA governs most jobs in the United States, some employees are excluded from the Act’s overtime rules. These employees are referred to as “exempt” employees.
Determining whether an employee is exempt or non-exempt under the FLSA can be tricky, and may depend on how much an employee is paid, how they are paid, and what type of work they perform. As a general rule, to be considered exempt, an employee must meet each of the following three criteria:
- the employee is paid at least $23,600 per year ($455 per week);
The Fair Labor Standards Act (FLSA) establishes employment standards that impact individuals employed in state, federal, and local government. The FLSA covers minimum wage, overtime pay, and record-keeping requirements.
The FLSA requires non-exempt employees to receive overtime pay if they work over forty hours. The rate must be at 150 percent of the employee’s regular rate of pay. Notably, this overtime rate does not apply to employees who work on holidays or weekends, unless they work over 40 hours. However, there are some exceptions to this.
Retail Exemption under the FLSA
Given the technological advancements over the past few decades, more and more employees are expected to be on call – either officially or unofficially – all day, every day. Most often, this occurs when an employee receives a phone call or email after they have left the office for the day. And depending on the sender of the communication, the subject, and the workplace culture, an employee may feel as though they must address the issue although they are technically off the clock.
The question frequently comes up whether an employee must be compensated for this type of work. The answer depends if the employee is exempt or non-exempt. Non-exempt employees must be paid for all the time they work, whereas exempt employees do not. If a non-exempt employee is not paid for their off-the-clock work, they can pursue an FLSA or unpaid wages claim against their employer.
An exempt employee is one who is exempt from the minimum wage and overtime requirements of the Fair Labor Standards Act (FLSA). For an employee to be characterized as exempt, an employer must pay them a salary rather than an hourly wage. The idea being that an exempt employee is compensated for getting a job done, regardless of the time it takes. Typically, exempt positions are reserved for executive, management, and professional employees.
For many Texas employees, monetary pay is only a part of the overall compensation package offered by employers. For employees who have children or care for a sick family member, the paid- and unpaid-leave benefits provided by many employers are just as important as one’s salary or wages. Unfortunately, Texas employers are not required under any state or federal law to provide paid-leave benefits to employees, except under certain circumstances.
As a general rule, a Texas employer can decide whether to offer benefits to its employees. There are times, however, where an employer is required to provide certain benefits to its employees. One example is where an employer’s written policy provides benefits to employees, but the employer denies a qualifying employee access to these benefits. The Texas Payday Law states that an agreement to provide paid or unpaid leave is an enforceable term of the wage agreement. Thus, an employer who may not be required by law to offer benefits becomes obligated to provide them if there is a written policy offering benefits to qualifying employees.
For those who work in the service industry, the importance of tips cannot be overstated. Many service employees work primarily for tips, meaning that their employer only provides them with a minimal level of base hourly compensation. Thus, for many service employees, their lives literally depend on the amount of tips they bring in.
On its face, the concept of tipping seems to only benefit the employee receiving the tip. However, over the years, employers have also found ways to benefit from society’s expectation that an employee will be tipped for the services they provide. For example, under Texas law, an employer is able to pay a tip-eligible employee less than those employees who do not receive tips by taking a “tip credit.”
A tip credit is an adjustment that employers can make to a tipped employee’s wage, assuming that the employee will make up the difference in tips. For example, the minimum wage in Texas is $7.25/hour. However, an employer only needs to pay a tip-eligible employee $2.13/hour. The remaining $5.12/hour is considered a tip credit. If, however, the employee does not bring in at least an additional $5.12/hour, the employer will be required to pay the difference. Thus, tipping allows for an employer to pay its tipped employees less than they pay non-tipped employees.