Inclusion of Coffee Person in Tip Pool May Invalidate Tip Credit

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Inclusion of Coffee Person in Tip Pool May Invalidate Tip Credit

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A tip out to a coffeeman who does not interact with customers may invalidate a restaurant tip pool according to a Decision by the Fifth Circuit Court of Appeals.

In a case against Tony’s Restaurant, a fine dining restaurant in Houston, a coffeeman received a fixed ten dollars from each station each shift. The servers at the restaurant sued, claiming that by requiring them to share tips with the coffeeman, who worked in the kitchen and did not serve customers, the restaurant violated the Fair Labor Standards Act, and was not entitled to take a tip credit.

The Court of Appeals explained the tip credit rule as follows: “A restaurant may not claim a tip credit unless all tips received by a tipped employee have been retained by the employee, except that this subsection should not be construed to prohibit the pooling of tips among employees who customarily and regularly receive tips. 29 U.S.C. § 203(m). Thus, the general rule is that an employer may not claim a tip credit unless a tipped employee is permitted to retain all of his tips. The statute provides a limited exception to this rule by permitting the pooling of tips among employees who customarily and regularly receive tips. If an employee is required to share tips with an employee who does not customarily and regularly receive tips, the employer may not legally take a tip credit.”

In this case, the Court held that a jury could find that the coffeeman did not customarily and regularly receive tips, and may therefore be ineligible to participate in the restaurant’s tip pool.

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