Employment Discrimination Blog

Illegal Tip Pooling in Restaurants

Published on 11th June, 2014 under Labor Law

Many restaurants around the country have recently been hit with lawsuits by employees alleging illegal tip pooling. Employers are required to pay workers the federal minimum wage of $7.25 per hour with an important exception for service workers. If you make more than $30 per month in tips, your employer can take what’s known as a tip credit allowing them to pay below minimum wage to compensate for the difference. The liability for violating the legal requirements of tip pooling can be huge, as employers must often make up the difference between the reduced hourly pay and minimum wage.

If you’re a company like Starbucks, that can translate to big bucks. Last year, the Seattle-based coffee giant settled a class action lawsuit in Massachusetts for $23.5 million. Employees filed suit alleging that shift supervisors, who make a higher hourly wage and perform limited supervisory duties, should not be entitled to share tips. In California, however, courts have held that shift managers who perform many of the same functions as baristas, and primarily serve customers, are entitled to tips. In November of 2013, a New York State Court reached the same conclusion and ruled in favor of Starbucks, finding that shift managers could share in tip pooling arrangements, so long as they did not exert meaningful or significant authority or control over other employees.

Are You a Victim of Illegal Tip Pooling?

Workers in the service industry need to know their rights when it comes to tips and wages. While occasionally it is clear when an establishment is violating wage and hour requirements, it is often hard to know exactly where the law stands. If you suspect you have been subjected to an illegal tip pooling scheme by your employer, contact the Law Offices of John J. Zidziunas & Associates to discuss your rights. The law prohibits employers from firing or retaliating against workers who bring illegal activity to light, so please do not hesitate to contact our New Jersey and New York tip pooling lawyers. For further information, please feel free to call us at 973-509-8500, email info@jjzlawfirm.com, or visit our webpage at employmentdiscrimination.com.

DISCLAIMER: This web log is not legal advice, nor should it be construed to be legal advice or the offering of legal advice. It should not be read as guaranteeing or suggesting any particular outcome in any Court will occur in any particular case. It is not, and should be read as, a complete or authoritative analysis of the state of law, which is constantly subject to change.