Levetown Law PLLC is investigating the tip pooling practices used by restaurants and restaurant chains to determine whether they violate state and federal laws.
What is Levetown Law Investigating?
If your employer takes a portion of your tips and reallocates them to back of the house employees, they may be violating wage and hour laws and you may be entitled to significant damages set by state and federal laws designed to protect workers and to stop these unlawful practices.
For example, Levetown Law PLLC has discovered that Chiko restaurants, and many other restaurants around the country and in the District of Columbia seemingly require tipped employees to share their tips with kitchen staff, also known as back of-the-house employees. If this is true, this practice could violate DC and federal laws.
Restaurants must also provide tipped employees with a detailed notice (called a “tip notice”) that is required by law.
What laws would this practice violate?
The Fair Labor Standards Act (the “FLSA”) permits employers to pay tipped employees a lower base hourly wage but only if their tips bring their total wage up to the minimum wage for each hour worked. This arrangement is known as a “tip credit.”
Under the FLSA, if an employer uses a tip credit, it cannot require tipped employees to share tips with kitchen staff. The Department of Labor has issued a summary of all tip credit requirements in Fact Sheet # 15, Tipped Employees Under the Fair Labor Standards Act.
What happens if an employer violates these requirements?
If an employer does not follow these requirements, it must pay tipped employees the full minimum wage and pay them the tips that were distributed to kitchen staff. Additionally, the employer generally must pay an additional equal amount as liquidated damages plus reasonable attorney’s fees. 29 U.S.C. § 216(b). In other words, the employer must generally pay two times back wages.
What if state wage and hour laws are more favorable to the employee?
If state wage and hour laws are more favorable to the employee, the state laws must be followed.
For example, under D.C. law, it is unlawful to have a tip pool with kitchen staff, managers, or other employees who do not traditionally receive tips even if the employer pays minimum wage to the employees. An employer violating these provisions must pay the employee four times back wages owed.
Maryland also has strong protections for employees. If an employer violates the tip laws, Maryland Labor & Employment Code §3-507.2 requires the employer to pay three times the unpaid wages, attorneys’ fees and costs.
Finally, under the Virginia Wage Payment Act, “If the court finds that the employer knowingly failed to pay wages to an employee [as required], the court shall award the employee an amount equal to triple the amount of wages due and reasonable attorney fees and costs.”
What can I do if my employer is violating the law?
If you believe your employer is violating any of these provisions (for example, by including kitchen staff in a tip pool), you may be entitled to significant compensation.