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Restaurant to Pay $95K for Allegedly Shortchanging Tipped Workers


Restaurant to Pay $95K for Allegedly Shortchanging Tipped Workers

Employees claim that paychecks often didn’t add up

While wage theft is a problem across all employment sectors, tipped employees may be especially vulnerable.

That’s because compensation for tipped employees is often governed by different rules. The ensuing confusing may make it all too easy for unscrupulous employers to line their own pockets with workers’ rightfully earned dollars.

For example, employees at the Keg & Kitchen Restaurant recently sued the company owners, claiming unfair pay practices.

The workers alleged that the restaurant owners regularly adjusted their reported work hours in order to avoid paying overtime. They also claimed that managers forced wait staff to share tips with people who wouldn’t normally receive tips, and required servers to spend so much time on non-serving activities (such as cleaning), that they often ended up making less than minimum wage.

The company argued that it lawfully compensated its employees. However, despite that, it just agreed to settle the case for $95,000.

Let’s take a look at what tipped employees should know to ensure they’re paid in accordance with the law.

Who is officially considered a tipped employee?

Tipped employees are generally considered those who receive $30 or more per month in tips.

If you get tips, do you still get minimum wage?

Officially yes, tipped workers are supposed to get minimum wage.

However, the employer is not required to pay the entire minimum hourly wage out of its own pocket. Rather, employers pay a lower hourly amount to tipped employees with the understanding that the rest of the worker’s hourly wage will be derived from tips. This difference is known as a tip credit.

For example, under federal law, employers must pay tipped employees a regular hourly wage of at least $2.13 per hour. (Some states may have higher rates.) Using federal minimum wage of $7.25 per hour, employers may take a tip credit of $5.12 per hour.

But here’s the catch: if tipped employees do not make enough money to achieve minimum wage through tips, employers are supposed to make up the difference.

Can tipped employees get overtime?

Yes. Tipped employees are generally entitled to receive time-and-a-half for any hours worked over 40 hours in a given week.

How are tip credits affected by overtime?

Calculations pertaining to tip credits and overtime can, admittedly, become complicated.

Generally, employers may not increase the amount of tip credits they take when calculating overtime.

So if an employer normally takes a tip credit of $5.12 per hour, that rate cannot be increased for overtime hours­—even though tipped employees are still entitled to time-and-a-half of federal or state minimum wage for hours worked over 40 in a given week.

Contact Us Now for Consultation

If you’re a tipped worker and you believe that you haven’t been paid in accordance with the law, it’s a good idea to speak to an attorney to find out about your legal rights.

Call or email us today to discuss your unique situation.

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