Regulators at the U.S. Department of Labor (USDOL) had a busy summer dealing with violations of the wage and hour laws that deal with tipped workers.
According to Bloomberg Law, the federal agency cited at least 13 companies for tip-credit and tip pool violations between June and August 2024. The crackdown shines a light on some of the most exploitative pay practices anywhere in the American workforce: taking advantage of people who are already making below minimum wage.
Breaking down the tip-credit violations
Under federal wage laws, tipped workers can be paid as little as $2.13 per hour. (Ohio state law sets a higher bar: half the state minimum wage of $10.45 per hour, so currently $5.23 per hour). However, employers that take advantage of these provisions must follow the rules, including:
- The employer cannot keep the employee’s tips for any purpose.
- The employer must make sure workers make at least the minimum wage (plus any overtime) at the end of the pay period. In other words, if tips aren’t enough to get the worker up to the regular minimum wage, it’s on the employer to make up the difference.
- The employer must keep records of the weekly or monthly amount of tips received by each employee.
The law also limits “tip pooling” – the practice of requiring employees to combine their tips and share them evenly. Tip pools are only allowed if all the workers participating are earning the tipped wage or all the workers contributing receive the full minimum wage.
However, employers don’t always follow the law in practice
Unfortunately, on the ground, employers don’t always follow the rules. In the largest USDOL case involving these rules this summer, the federal agency obtained a $1.3 million consent judgment against the operator of a Mexican restaurant. Investigators found that the restaurant required employees to surrender a portion of their tips to the employer – a clear violation of the rules. The restaurant also failed to properly keep records that could be used to determine whether their tip pool was valid.
The agency’s other enforcement actions included restaurants that were allowing managers to participate in the tip pool, pocketing tips, and failing to pay overtime to tipped workers.
If you are a tipped worker, make sure you know your rights
While tipping is often sold as a benefit to workers by allowing them to make significantly more money on busy shifts, it’s also ripe for abuse by employers. If you work at a restaurant or in another tipped position, it’s important to know your rights. Keep track of the tips you receive on each shift and do the math each pay period to ensure that you are actually getting paid the full minimum wage. And if your employer uses a tip pool, pay attention to who is allowed to participate and who is allowed to take a cut. If you see something, say something.
Tipped minimum wage violations are all too common in Ohio and throughout the nation, and these violations can have a dramatic impact on workers. You deserve to keep all the tips you have earned, and if your employer is violating the law, you have recourse. Contact the experienced employment law attorneys at Gibson Law, LLC for a free case evaluation.