One of my cornerstone beliefs on obtaining a happy and successful life is that you must treat all people with dignity and respect until they prove otherwise. If you start all interactions in this way, no matter the background or position of the people you meet, it is amazing how often you get their respect and courtesy back. This principal should be a universal standard, but sadly, it is not. When I discuss this belief with young people, I always use one example: you can tell more about a person based on their treatment of servers or bartenders at restaurants than almost any other short-term indicator. I do not associate with someone who talks down to a server or fails to recognize the hard work they are doing.
Unfortunately, in my law practice, I have found that the restaurant industry itself is not treating servers, bartenders and other hourly employees with respect and dignity and many are breaking the law. I, along with some very good lawyers with whom I associate, have represented hundreds of hourly and tipped employees throughout the southeast in class and collective actions as a result of restaurant owners and management continuously attempting to circumvent the Fair Labor Standards Act.
You should be sure your family, friends and clients that work in the service industry are not part of an illegal wage plan depriving them of money they are owed. Here are a few examples of what you should look for in protecting the rights of hourly and tipped clients in the hospitality industry.
REQUIRING TIPPED EMPLOYEES TO SHARE WITH BACK OF THE HOUSE EMPLOYEES OR THOSE THAT DO NOT REGULARLY AND CUSTOMARILY RECEIVE TIPS
In Delaney v. Geisha NYC, LLC, 261 F.R.D. 55 (S.D. N.Y. 2009), the court recognized the general rule that if a tip pool includes employees who do not customarily and regularly receive tips, the employer must pay them the full minimum wage. 46 A.L.R. Fed. 2d 23 (Originally published in 2010). The common wrongful policy is for owners and management to require that servers and bartenders share their tips with back of the house employees like cooks, expeditors and other employees that do not customarily and regularly receive tips and have little direct customer contact. Fair Labor Standards Act of 1938, § 3(m, t), 29 U.S.C.A. § 203(m, t). Solis v. Lorraine Enterprises, 907 F. Supp. 2d 186 (D.P.R. 2012).
REQUIRING “TIPPED EMPLOYEES” TO SHARE WITH MANAGERS/OWNERS
Managers that bartend or serve as expeditors while receiving salary and taking part in the tip share with hourly tipped employees are most likely violating the FLSA. In Alonso v. Uncle Jack's Steakhouse, Inc., 648 F. Supp. 2d 484 (S.D. N.Y. 2009) (unreported opinion), a case granting conditional class certification to a group of employees, the court found that the plaintiffs had sufficiently shown that their employer had violated 29 U.S.C.A. § 203(m) where they alleged that it kept for itself and its managers a large percentage of all gratuities received from "large parties." If management is keeping part of the tip share, your clients and family members should seek counsel regarding the policy.
THE TIP SHARE POLICY ONLY REDISTRIBUTES A PORTION OF THE TIPS COLLECTED
Tipped employees have a right to all of their tips but they can enter into a valid tip pool policy to share with other employees who customarily and regularly receive tips. In administering the tip pool, management cannot retain or redirect tips for its own purpose. Employers violate 29 U.S.C.A. § 203(m) if it distributes only a fraction of the total in a tip pool back to them, using the remainder not only to pay ineligible non-tipped employees, but also to fund certain of the defendants' charitable activities. 46 A.L.R. Fed. 2d 23 (Originally published in 2010).
These unlawful policies are only a few of the ways that employers in the restaurant industry are trying to avoid paying minimum wage to employees and essentially directing other employees to pay for their work. These schemes can amount to hundreds of thousands of dollars being saved by the employer in violation of the FLSA and those employees who need the money the most are victims of the scheme.
We all have family and friends who have worked in the service industry. Don’t let them be victims of an unlawful wage policy. Please call me if you have questions regarding wage and hour issues and always treat your servers and bartenders well.
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