A recent case out of the 5th circuit looked at the circumstances surrounding a tip pool arrangement and some of the various different issues to think about in determining whether the tip pool is valid.
Pursuant to the Fair Labor Standards Act (FLSA), all workers are entitled to earn at least minimum wage. For tipped employees, determining your wages may be more challenging, however certain tip pool rules exist to ensure that where a significant part of your pay comes from tips, that you earn the required minimum standard.
The recent wage and hour lawsuit looked at the tip sharing formula set up by a restaurant. In this situation, the restaurant required that two waiters share their tips with the “coffee man.” The coffee man received a fixed $10 from the pool, while the waiters earned $2.13/hour plus their draw from the tip pool. The waiters asserted that this split was unfair because pursuant to the FLSA only tipped workers are allowed to participate in a tip poll – tipped workers include those those who customarily and regularly receive a certain amount of tips. Generally, courts have reviewed the employee’s job duties to determine whether he was tipped or not, an analysis that requires a fact-intensive case-by-case inquiry. On appeal, the court further explained that to be a tipped employee, the worker has to have at least some interaction with the customers.
The 5th Circuit held that because the coffee man had only minimal once-a-week interaction with customers, a jury could determine that he shouldn’t have been part of the tip pool.
Generally, federal law provides that tip pools are valid – as long as the employees are made aware of the arrangement, and follow other requirements as imposed by state and federal law.
For more information or if you have questions concerning your pay, please contact the knowledgeable Atlanta wage and hour lawyers at Buckley Beal, LLP for an immediate consultation.