The U.S. Department of Labor has issued a proposal to change the tip sharing regulations under the Fair Labor Standards Act (FLSA). Under the proposed rule, workplaces would have the freedom to allow sharing of tips among more employees. The proposal would help decrease wage disparities between tipped and non-tipped workers – an option that is currently restricted by a rule promulgated in 2011 that has been challenged in a number of courts.
The Department of Labor’s proposal only applies where employers pay a full minimum wage and do not take a tip credit and allows sharing tips through a tip pool with employees who do not traditionally receive direct tips – such as restaurant cooks and dish washers. These “back of the house” employees contribute to the overall customer experience, but may receive less compensation than their traditionally tipped co-workers. The proposal would not affect current rules applicable to employers that claim a tip credit under the FLSA.
The Department of Labor promulgated tip regulations in 2011 that restricted this option. Since 2011, there has been a significant amount of litigation involving the tip pooling and tip retention practices of employers that pay a direct cash wage of at least the federal minimum wage and do not claim a FLSA tip credit. There has also been litigation directly challenging the Department’s authority to promulgate the provisions of the 2011 regulations that restrict sharing of tips.
The Department of Labor stated that in the past several years, several states have changed their laws to require employers to pay tipped employees a direct cash wage that is at least the federal minimum wage. This means that fewer employers can take the FLSA tip credit. The Department of Labor’s proposed new rule follows these developments, along with serious concerns that it incorrectly construed the statute when promulgating the 2011 regulations.
It should be noted that many states like New York and California, have laws that prohibit tips from being shared between back-and-front-of-the-house employees, and that also explicitly prohibit management from sharing in the pot.
Six Roanoke, Virginia area restaurants and their owners will pay $1.5 million in back wages and an equal amount in liquidated damages, to 149 employees for Fair Labor Standards Act (FLSA) violations. The settlement, which was entered into in U.S. District Court for the Western District of Virginia, is a result of a U.S. Department of Labor Wage and Hour Division investigation.
The Department of Labor’s investigation found that the restaurants willfully violated FLSA minimum wage and overtime provisions by only compensating servers through tips and not paying the federal minimum wage at one-and-one-half their regular rates of pay when they worked more than 40 hours in a workweek. The restaurants also paid non-exempt kitchen staff – cooks, assistant cooks, and dishwashers – straight time for the overtime hours they worked. Investigators also found the restaurants violated the worker’s rights by failing to keep and maintain accurate records of the hours employees worked as required.
“This resolution secures proper compensation for these hard-working employees, and helps ensure that the law will be followed in the future,” said a representative for the Department of Labor. “The agreement recovers wages owed to employees for work performed years ago,” commented another representative. “The outcome in this case positively impacts voluntary compliance in the food service industry in Virginia, and will level the competitive playing field for employers that comply with the law.”
Renowned Long Island restaurant, Maroni Cuisine, has agreed to pay $110,000 to settle a lawsuit alleging that the restaurant did not pay a cook overtime pay, in violation of the Fair Labor Standards Act (“FLSA”) and the New York Labor Law (“NYLL”). Maroni, notable for its exceptional meatballs, was voted the second best restaurant on Long Island by Zagat, and was also featured on “Throwdown with Bobby Flay.”
The cook who brought the lawsuit alleged that he was required to work approximately fifty-two hours per week, and was misclassified as an exempt employee and paid a weekly salary contrary to the Fair Labor Standards Act and the New York Labor Law. The FLSA and NYLL provide that only employees who fit within the administrative, executive, or professional exemption qualify as exempt from the overtime laws, and all other employees must be paid overtime pay for hours worked over forty.
Vivianna Morales, an attorney with Pechman Law Group, was the lead attorney on behalf of the worker at Maroni.
‘Essen, a to-go café with locations in Midtown East, Hell’s Kitchen, and Financial District in New York City, has been hit with a wage violation lawsuit. The lawsuit alleges that the cafe failed to pay several cooks, food preparers and salad preparers minimum wage, overtime pay, and spread-of-hours pay. The lawsuit claims that these cooks, food preparers, and salad preparers would work between 48 to 78 hours a week, and would be paid fixed weakly salaries regardless of how many hours they worked. The employees also claim that they were forced to buy “tools of the trade” such as work uniforms out of their own pockets. Lastly, the lawsuit asserts that ‘Essen required employees to sign documents claiming they were paid properly in order to disguise the actual number of hours worked by employees.
For example, one employee claims worked approximately 78 hours a week and was paid a fixed weekly salary of $550.00. His hourly wage rate for those weeks was approximately $7.00, below the minimum wage. This employee also claims was asked to sign a document which he didn’t understand in order to receive his pay, and did not receive his pay when he failed to do so.
Sous Chefs who worked in the kitchen at restaurants owned by China Grill Management, including Ed’s Chowder House, Empire Hotel Rooftop, and China Grill, have sued the restaurants for denial of overtime compensation required by federal and state wage and hour laws.
The employees allege in their Class Action Complaint, filed in New York federal court, that they were not paid an overtime premium for all hours worked over 40 in a given work week. The workers claim they were misclassified as exempt from the Fair Labor Standards Act (FLSA), which requires each covered employer to compensate all non-exempt employees at a rate of at least one and one-half times the regular rate of pay for work performed in excess of forty hours per work week.
The sous chefs seek unpaid overtime wages, liquidated damages, and attorneys’ fees and costs. Under the FLSA, kitchen workers and cooks are generally entitled to overtime unless they are salaried employees who fall into an administrative, professional, or executive exemption from the law.