The Hostess City has been voted the 9th best city in the world according to Travel + Leisure. That means a lot of visitors, which is great for the hospitality industry. But what does it mean for employees in the service/hospitality industry? What should servers, bartenders, and bussers look out for?

Tipped Employees

If you work as a tipped employee (whether you’re a server, bartender, busser, hostess, or in some other position), and your employer isn’t paying you $7.25/hour (or more - and hopefully it's more), your employer must follow a special set of rules and regulations.

What is a tip credit?

The Fair Labor Standards Act allows employers to take a credit toward the hourly minimum wage payment for a “tipped employee” if the employer meets certain requirements. A tipped employee is any employee who receives $30 or more per month in tips (a very low threshold – who could live or do anything with only $30/month in tips?). The employer also has to tell the employee (verbally or in writing) the following:

The amount of the cash wage the employer will pay to the tipped employee (must be at least $2.13/hour);
The additional amount claimed by the employer as a tip credit (must not be more than $5.12/hour – the difference between the cash wage and $7.25, the current minimum wage);
That the tip credit claimed by the employer cannot exceed the amount of tips actually received by the tipped employee (that’s right – the employer CANNOT take the credit if you don’t make enough to meet the $7.25/hour threshold);
That all the tips the employee earns are his or hers to keep unless the employee is part of a valid tip pool (more on that later); and
That the tip credit will not apply to any tipped employee unless the employee has been told about these provisions.

Here are some problem areas to look out for:

What about all that sidework?

Most employees in the food/beverage industry have to perform sidework at some point during their shift. When I was a server, I had to roll what felt like a million sets of silverware before I could leave for the night. Other sidework duties may include general food prep, cleaning floors, washing dishes, setting up the bar, or refilling/restocking condiments and supplies. When this work exceeds 20% of the total hours you’re working (in other words, you’re spending most of your time doing sidework instead of serving), your employer should pay you the full cash minimum wage for those hours. If you really are rolling a million sets of silverware during your shift, there’s probably a problem. Call us for a free consultation if you’re concerned about not receiving the full minimum wage.

Is your boss keeping any of your tips?

That’s not allowed. If your employer takes advantage of the tip credit, you must be allowed to keep any and all tips you earn during your shift. If your employer is forcing you to give part of your tips to kitchen workers or other non-tipped employees (e.g., a hostess or some other worker) this could be in violation of the Fair Labor Standards Act (in the absence of a valid tip pool).

What is a valid tip pool?

If you’re a server, you’ve probably been part of a tip pool – meaning you had to give other servers or the bartender a certain percentage of your tip. The FLSA allows this under certain circumstances and doesn’t impose any particular percentage or minimum. But you cannot be required to share tips with someone who typically doesn’t receive any tips at all. In other words, if you’re being forced to give part of your tips to someone in the kitchen, a busser, or a hostess and those people don’t get any tips from customers, call us to talk about your options.

What about those times you work a lot?

If you work more than 40 hours in a week, you’re entitled to overtime based on the full minimum wage, not the cash wage you’re paid for normal working hours. In other words, if you’re paid $2.13/hour and your boss takes a tip credit of $5.12/hour, you should be making (through tips and cash) $10.88/hour for hours you work over 40. And your employer can’t take a larger tip credit on those overtime hours than he or she does on your normal hours. In other words, you need to make more money during your overtime hours, or your boss needs to be paying you the difference.

The Hostess City’s fame and beauty will hopefully bring those in the service industry a lot of tips, but beware if your employer is taking the tip credit and isn’t paying you what you’re owed. Call us for a free consultation to talk about your legal rights.