Tipping & Tipped Employees
Bartenders, restaurant servers, casino dealers, housekeepers and others earn tips from patrons. These gratuities are a vital part of income for service workers, often accounting for more than 60 percent of take-home pay.
Stueve Siegel Hanson advocates for tipped employees when the system is abused through a number of common scenarios:
- Failure to Provide Tip Credit Notice. Under federal law, tipped employees may be paid an hourly wage lower than the federal minimum wage, as long as they earn enough tips to meet or exceed the minimum wage. The “tip credit” refers to the difference between the federal minimum wage and the lower hourly wage paid to tipped employees. Before taking a tip credit, an employer must inform the employee:
- The amount of the cash wage that is to be paid to the tipped employee by the employer;
- The additional amount by which the wages of the tipped employee are increased on account of the tip credit claimed by the employer, which amount may not exceed the value of the tips actually received by the employee;
- That all tips received by the tipped employee must be retained by the employee except for a valid tip pooling arrangement limited to employees who customarily and regularly receive tips; and
- That the tip credit shall not apply to any employee who has not been informed of these requirements in this section.
If the employer does not do this, the employee is owed the full minimum wage for each hour worked.
- Employer Retaining Employee Tips. Federal law requires that employees be permitted to retain all of their tips with the exception of the employer receiving credit for the employee’s tips up to minimum wage. If an employer (whether through the manager, supervisor or otherwise) keeps any portion of any employee’s tips, then the employer cannot take a tip credit; the employer owes the employee the full minimum wage for each hour worked, and the employer must refund all wrongfully diverted tips.
- Inclusion of Managers and Supervisors in a Tip Pool. Some employers require employees to pool their tips, then distribute the pooled tips out based on hours worked during the workweek. In these situations, managers and supervisors may not participate in the tip pool. If they do, the employer cannot take a tip credit – once more, the employer owes the employee the full minimum wage for each hour worked, and the employer must refund all wrongfully diverted tips.
- Miscalculation of Overtime. When tipped employees are paid overtime, the employer must pay the tipped employee at least 1.5 times the employee’s direct cash wage plus the amount of the tip credit. In many situations, employers will attempt to pay overtime at 1.5 times the lower pre-tip wage.
- Tipped Employee Wage Deductions. Employers cannot deduct certain costs, such as uniforms or name badges, from their employees’ wages while taking a tip credit.
Our firm has and continues to prosecute “tipped employee” claims against all of the largest casino operators in the country, including Penn National Gaming, Caesars Entertainment, Pinnacle Entertainment, Boyd Gaming and Tropicana Entertainment.
If you are a tipped employee who suspects you are not being paid correctly, contact us here or call us today at 1.800.714.0360 for a free, confidential consultation.