Restaurant Owners: More Wage & Tip Pool Violations to AvoidBy James Blake on
Restaurant owners frequently work in their own restaurants as cooks, bartenders, servers, etc. Yet despite doing the same job, an employer working as a restaurant employee doesn’t have the same rights as other employees. Under state and federal law, certain “tipped employees” may be paid less than the standard minimum wage if tips supplement the hourly wage to equal or exceed minimum wage. Additionally, many restaurants establish “tip pools” that are distributed to tipped employees. Can an employer who is working in a restaurant as a tipped employee participate in tip pool distribution?
No. In general, restaurant owners cannot participate in tip pool distributions. In a recent lawsuit, a restaurant owner who worked as a bartender argued that he could be classified as a tipped employee under the Fair Labor Standards Act, and thus, was eligible to receive tip pool distributions. The trial court disagreed and stated that it would be an “anathema” to the purpose of the law for a restaurant owner to take tips from a fund established to compensate employees who are paid below the standard hourly wage. The court further stated, “[e]very court that has considered the issue has unequivocally held that the FLSA expressly prohibits employers from participation in employee tip pools.”
James Blake is an Austin Business Attorney who regularly advises restaurants in legal, management, employment, and acquisition matters. Contact our Austin Business Law Firm today to schedule a consultation.