In the restaurant business and hospitality industry in general, employees who provide services, such as servers, hosting staff, bartenders and bus persons typically receive tips from customers. Under the Fair Labor Standards Act (FSLA), which is a federal law, tipped employees are workers who “customarily and regularly receive more than $30 per month in tips.”
A tip pool is a common fund used by an employer where all tipped service employees pool their tips together, and the employer then divides the tips fairly among the employees.
Based on the NY Hospitality Industry Wage Order, employers can require directly tipped employees to participate in a tip pool. This law also establishes tip credits for employers using tip pools. It also allows tipped employees to take legal action against employers who violate tip pool regulations.
As an employer, here are some violations to avoid:
• Including employees in tips pools who do not belong based on their duties, such as cooks, dishwashers and other kitchen workers
• Failing to pay tipped employees overtime when their schedules exceed 40 hours or their work day exceeds 10 hours
• Including managers and employers in tip pools
• Failing to keep daily records that show tips collected by employees for each shift, occupations eligible for tip pooling, shares each occupation receives and the amount each employee received in tips by date
Participants have the right to view the tip polling records.
Employers are at risk for collective or class action lawsuits when employees believe restaurant owners have violated tipping pool regulations. By working closely with a New York employment defense lawyer, you can ensure you comply with regulations and protect your restaurant and your bottom line.
Our employment defense attorneys at Stephen Hans & Associates bring decades of legal experience to the table and help restaurant owners handle all types of employment related disputes.