Failure to Properly Pay Tips

Failure to Properly Pay TipsTip misappropriation is an epidemic in today’s cash driven service industries. While federal and state laws emphasize that tips are the sole property of the employee, these laws allow employers to use a portion of earned tips to offset the minimum wage owed to the tipped employee. Employers often take advantage of this “tip-credit” under impermissible circumstances or fail to comply with the extensive legal requirements of its use.

Federal and state laws also permit employers to implement a tip-pooling or a tip-sharing system. However, employers often enforce such systems improperly or allow them to extend to ineligible non-tipped employees, thereby making such systems invalid and illegal.

The laws governing the treatment of tips are extensive and complicated. We often see violations occurring in the following circumstances:

  • Tip-credits being taken on time spent doing non-tipped work.
  • Tip-credits being taken in amounts that are larger than what is permissible under the laws.
  • Overtime rates being calculated after tip-credits are deducted from the regular rate.
  • Employers taking any portion of tips or participating in a tip-pool or share system.
  • Tipped employees being required to share or pool tips with non-tipped employees (cooks, dishwashers, hosts, maître d’, managers, owner, etc.).
  • Employees being charged for walk-outs, breakage or other losses.
  • Employees not being paid for all time worked, including set-up, clean-up and side-work.
  • Withholding or failing to pay credit card tips to employees during the proper pay periods.
  • Failing to pay additional “Spread of Hours” compensation when the beginning and end of an employee’s day is more than 10 hours apart, even if they are not working the entire time.
  • Employers requiring uncompensated uniform maintenance.

We are committed to ensuring that tipped employees are paid every dollar they are entitled to. If you believe your tips are being mishandled or you are otherwise not being compensated properly, please contact our attorneys for a free and confidential consultation: (877) 247-4292.

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