Common mistakes: Minimum wage for tipped employees

Common mistakes: Minimum wage for tipped employees

The Fair Labor Standards Act (“FLSA”) is a federal law that requires most employers to pay most employees, including tipped servers, hostesses, busboys, and bartenders, at a minimum wage of at least $7.25* and at a required overtime rate. Similar Florida law also requires most employers to pay most employees, including tipped servers, hostesses, busboys, and bartenders, at a minimum rate set each year by the Florida Department of Economic opportunity. The Florida minimum wage rate is as follows and also the minimum wage for tipped employees such as servers, hostesses, busboys, and bartenders:

  • January 1, 2011 through May 31, 2011 $7.25
  • June 1, 2011 through December 31, 2011 $7.31
  • January 1, 2012 through December 31, 2012 $7.67
  • January 1, 2013 through December 31, 2013 $7.79
  • January 1, 2014 through December 31, 2014 $7.93
  • January 1, 2015 through December 31, 2015 $8.05

How does tip credit count towards minimum wage?

The FLSA and similar Florida law allows restaurants and other employers to take a tip credit towards the minimum wage for tipped servers, hostesses, busboys, bartenders, and other customarily tipped employees. The tip credit is a credit given to the restaurant or other employer towards the minimum wage for tipped employees and allows a restaurant or other employer to pay servers, hostesses, busboys, and bartenders below the required minimum wage to account for the tips those employees should receive. In essence, the tips raise the tipped employee’s lower wage to meet the minimum wage.

Currently, the maximum tip credit towards the minimum wage for tipped employees allowed under the FLSA is $5.12 and the maximum tip credit allowed under Florida law is $3.02**. When a restaurant or other employer claims a tip credit towards the minimum wage for tipped servers, hostesses, busboys, and bartenders, all tips must be retained by the server, hostess, busboy, or bartender. Generally, a restaurant or other employer is not permitted to retain any portion of the tipped server, hostess, busboy, or bartender’s tips for things such as walkouts, breakage, or cash register shortages.

How does a tip pool arrangement work for employees?

Restaurants and other employers are often allowed to require a server, hostess, busboy, and bartender to participate in a valid tip pooling arrangement that includes servers, hostesses, busboys, bartenders, and other employees that customarily and regularly receive tips. The tip pool arrangement usually cannot include owners, managers, cooks, chefs, dishwashers, and other back of the house employees. If an ineligible employee participates in the tip pool arrangement, the restaurant or other employer may not be permitted to take the tip credit towards the minimum wage for tipped employees. In this case, the tipped server, hostess, busboy, or bartender might be entitled to back wages in the amount of the tip credits taken by the restaurant or other employer.

In some cases, a tipped server, hostess, busboy, or bartender is employed by the employer in dual jobs:

This means that the server, hostess, busboy, or bartender is completing tipped tasks such as serving guests and non-tipped tasks such as washing dishes and cooking.

The FLSA and Florida law allow a restaurant or other employer to take a tip credit towards the minimum wage for tipped employees for completing some non-tipped tasks.

However, if the non-topped tasks exceed 20% of the workweek, a tip credit cannot be taken against the hours spent doing non-tipped tasks:

In such a case, the server, hostess, busboy, or bartender might be entitled to back wages in the amount of the tip credit taken by the restaurant or other employer for each hour spent completing non-topped tasks.

What rights does a server, hostess, busboy, or bartender have?

Restaurants and other employers are required to pay minimum wage tipped employees such as servers, hostesses, busboys, and bartenders overtime even if the server, hostess, busboy, or bartender is receiving tips. When the restaurant or other employer takes a tip credit, overtime is calculated as 1.5 times the full minimum wage rate (i.e. currently $12.75 in Florida). The restaurant and other employer may then take the tip credit against the overtime rate. However, the tip credit taken by the restaurant or other employer for overtime hours must be equal to the tip credit taken against regular hours.

When the restaurant or other employer violates the tip credit requirements or has unpaid overtime, the server, hostess, busboy, or bartender may be entitled to unpaid wages plus liquidated damages in an amount equal to the unpaid wages. The server, hostess, busboy, or bartender may recover liquidated damages if the restaurant or other employer cannot establish:

(1) the restaurant or other employer’s failure to pay minimum wage and/or overtime was in good faith and

(2) the restaurant or other employer had reasonable grounds for believing its failure to pay minimum wage and/or overtime was not a violation of the FLSA and Florida law.

Life does not wait. Why should you?

If you believe that your employer has illegally taken the tip credit towards your minimum wages, contact us today so a qualified and experienced employment attorney can take action to help get you the wages you earned and the money you need.

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