Recently I was asked, “Why is it that servers are bagging up online orders for Uber, DoorDash, etc. and only getting paid $2.13 per hour to do so?” It certainly doesn’t seem very fair, but is it illegal? Like most things in law, the
The idea of someone taking our hard-earned wages strikes at the core of the average American. After all, we worked for and earned our paychecks. It should therefore come as no surprise that your employer cannot steal any of your wages. But many corporations and companies have become creative. They have found unique and clever ways to shortchange their workers and steal the wages left over. Nowhere is this more prevalent than in the restaurant industry. Restaurants have consistently targeted waiters and tricked them into illegally handing over their tips. And the worst part is, many of those affected do not even realize it. This article will examine common ways through which restaurants shortchange their workers and examine waiters’ rights under the Fair Labor Standards Act (“FLSA”).
The FLSA was passed to ensure that each and every worker receive the minimum wage as well as overtime pay when employees work for more than 40 hours a week. The only exceptions to this law, however, are restaurants. Although restaurants are required to pay their workers the minimum wage, they are allowed by law to take a “tip credit.” The tip credit allows a restaurant to pay its tipped workers $2.13 an hour rather than the standard $7.25 an hour, the idea being that the wages received plus the tips gained would provide waiters with the minimum wage. Nonetheless, restaurants have found illegal ways to try to circumvent the FLSA and shortchange their workers from the tips they are owed. The following are the most common ways through which restaurants shortchange their workers.
On December 22, 2020 the Department of Labor unveiled a final rule that will put into place a large swath of changes that will affect tipped employees across the country. One of the most troubling changes that will take effect is that employers will now be able to claim a tip credit on back of the house staff, which means that employees who are not traditionally and customarily tipped will now be able to participate in tip pools. This means that cooks, janitors and other traditionally non-tipped employees will be able to claim a portion of the tips that front of the house employees receive. Fortunately, this change will not be extended to managerial staff, who will still be unable to participate in the tip pool. At the moment, this new rule change is set to take effect 60 days after December 12, 2020.
Generally speaking the FLSA mandates that employers must pay their employees a minimum of $7.25 an hour for the work they perform. Among the various exemptions and loopholes that are found within the FLSA is an employer’s ability to claim a “tip credit” on certain tipped employees. When an employer elects to take a tip credit it allows them to pay the selected employees only $2.13 an hour so long as those employees still make a minimum of $7.25 an hour when the tips they have received are taken into consideration. Moreover, an employer is able to pool together all of the tips earned in a night and disperse it among the tipped employees. This is called a “tip pool.”