Restaurant Employee Tip Laws That Could Get You Sued

Restaurant Employee Tip Laws That Could Get You Sued
  • Restaurant employee tip laws and pay practices could get you sued

  • Your legal obligation as a restaurant employer to make a policy and protect against Sexual Harassment

Lexington Wolff is a restaurant employment lawyer with quite the story. After representing a number of restaurants in employee lawsuits, she began to see a pattern. Many of the lawsuits could have been easily avoided had the restaurant just been better informed about their obligations.

But as Lexi says, once you’re in a penny, you’re in a pound. Basically, it won’t matter whether or not your practices are legal. If your employees feel slighted or misunderstand a policy, they may take you to court which is costly whether or not you are at fault.

On this episode of the Barron Report, Paul asks Lexi your burning law questions around pay practices and sexual harassment. We start with the discussion of unpaid overtime.

Read More

Trump's New Tip Pooling Rule Means Harsh Fines for Rule-Breakers

Trump's New Tip Pooling Rule Means Harsh Fines for Rule-Breakers

First, the back story:  The Fair Labor Standards Act (FLSA) sets the rules for paying minimum wage and overtime.  It allows employers to take a tip credit against its minimum wage obligations if certain conditions are met.  One of those conditions is that tipped employees must be allowed to retain all of their tips. There is one exception to this – that employers can require employees to participate in a valid tip pooling arrangement.  

There are various requirements for a tip pool to be valid but most importantly, the tips can only be shared with people who customarily and regularly receive tips. Typically, these jobs are in the front of the house.

The FLSA is silent as to whether these same restrictions apply to employers who don’t take a tip credit and instead just pay a full minimum wage.  In 2010, the Ninth Circuit ruled that they don’t apply if you don’t take the tip credit. In 2011, the DOL issued regulations saying that they apply whether you take the tip credit or not.

The Tip Pooling Loophole

In 2017, the Trump Administration proposed a rule that would clarify this issue.  

The rule sought to allow employers who pay a full minimum wage to include back of house workers in a tip pool.  But the rule as proposed left open a potential loophole – that in giving employers control over the tips (under the expectation that they would use them to pay back of house workers) that the rule would have also allowed employers to pocket the tips if they wanted to.  

This prompted an enormous uproar and ultimately the administration scaled back; the law would be revised to make clear that employers cannot under any circumstances keep any portion of their employees’ tips.

Read More