Dallas Employment Lawyer Blog
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.
Tips are the primary source of income for many employees in the restaurant industry. Thus, tipped employees heavily depend on these tips in order to live and provide for their families. Understanding the value of tips, both federal and state laws have been established to protect the wages for working employees.
In Texas, tipped employees are those who customarily and regularly received more than $20 per month in tips. These employees often include waiters/waitresses and bartenders. Generally speaking, cooks, dishwashers, and maintenance personnel are not considered tipped employees. Regardless if an employee receives tips, an employer must ensure that employees are paid the $7.25 minimum wage.
Employers are allowed to pay tipped employees less than the $7.25 minimum wage if the employer provides proper notice to tipped employees as a tip credit. Notice is deemed proper if it satisfies section 3(m) of the Fair Labor Standards Act by stating (1) the amount of cash wage the employer is paying a tipped employee, which must be at least $2.13 per hour; (2) the additional amount claimed by the employer as a tip credit, which cannot exceed $5.12 (the difference between the minimum required cash wage of $2.13 and the current minimum wage of $7.25); (3) the tip credit claimed by the employer cannot exceed the amount of tips actually received by the tipped employee; (4) that all tips received by the tipped employee are to be retained by the employee except for a valid tip pooling arrangement limited to employees who customarily and regularly receive tips; and (5) that the tip credit will not apply to any tipped employee unless the employee has been informed of these tip credit provisions.
If proper notice has been given, an employer can pay a tipped employee as little as $2.13 per hour so long as the employee is making at least $5.12 per hour in tips. If employee does not make at least $5.12 per hour in tips to meet the minimum wage requirement, then the employer must make up the difference. You may be wondering what is the big deal if employers have to make up the difference. The big deal occurs when employers fail to uphold its responsibility to ensure that employees are paid the minimum wage, all tips are properly accounted for, and the earned tips have made it to the tipped employees. Put simply, it is ultimately the employer’s responsibility to make sure that employees are paid the minimum wage and receive all their tips.
Under both federal and state law, a tipped-employee must receive all tips he or she earns unless there is a valid tip pool. A tip pool occurs when tipped employees (individuals who normally and customarily receive tips) put all their tips together and split them among themselves. In Texas, employers are allowed to have employees join a mandatory tip pool. It is important to note that only tipped employees can participate in any tip pool, whether it is required or not. If a tip pool is created, non-tipped employees such as cooks, managers, owners, and maintenance personnel should not participate.
If there’s no tip pool, a tipped-employee is not required to give up any of his or her tip. In other words, if a percentage of a tip is not going into a tip pool, an employee does not have to use the tip to pay a service fee or walked tab. In fact, it is illegal for an employer to require an employee to pay such expenses.
Here’s my tip: If you believe that you have not received all of your tips, you are being paid less than the minimum wage, or tips are being taken to pay non-tipped employees or walked tabs, you should consult one of our Dallas Employment Attorneys. We are committed to making sure that you fairly and justly compensated for the work you perform.