Wage Theft Against Tipped Employees

Under the Fair Labor Standards Act, a “tipped employee” is any employee engaged in an occupation in which he or she customarily and regularly individually receives more than $30 a month in tips. Under federal law, employers are required to pay a tipped employee a minimum wage of at least $2.125 per hour. This includes many jobs in which tips are common including wait staff, busboys, and bartenders.

The Tip Credit

Employers may then “credit” tips received by an employee to make up the remaining portion of the applicable minimum wage. However, an employer must inform its employees of the tip credit before it is deducted.

Impermissible Tip Pooling

Some employers require that tips are “pooled.” This means that employees are instructed to contribute some of their tips to a general pool to be shared by other employees. The portions retained by the contributing employee and the portions obtained by the other employee(s) are considered to be the tips of the individuals who keep them.

Certain types of “tip pools” are prohibited by the Fair Labor Standards Act and constitute wage theft. Specifically, employees must not be required to contribute a significant portion (more than 15 percent) of their total tips to a tip pool. And, all of the participants in the tip pool must be employees who regularly receive tips. Thus, an employer cannot require an employee to “tip out” his or her tips to another employee who does not customarily receive tips.

Contact Us

As a tipped worker, your wages are protected by the Fair Labor Standards Act. If you suspect that your employer is running an illegal tip pooling system or withholding your rightful wages, contact the wage and tip pooling lawyers of Tycko & Zavareei LLP at 220-973-0900.