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Three MORE Ways Some Employers Rip Off Their Tipped Employees

This is the final installment of a four-part blog series on tipped employees, the minimum wage, and how some tipped employees are being ripped off by their employers.

Blog Series on Tipped Employees: Part 4

  • In Part 1 and Part 2, I explained how the minimum wage law applies to tipped employees. I also explained what a tip credit is and what the laws say about how an employer can properly take the credit.
  • In Part 3, I explained four ways that some employers rip off their tipped employees: by failing to pay minimum wage, taking the tip credit without proper records, taking the tip credit without notifying employees, and failing to pay overtime.

Here are three more ways some employees illegally rip off their tipped employees.

Treating a non-tipped employee as a tipped employee

A tipped employee is anyone who regularly receives more than $30 a month in tips.

An employer who is skirting the law might try to treat non-tipped employees as tipped employees. After all, an Oklahoma employer must pay a tipped employee a base pay of $3.625/hour, which is just half the minimum wage.

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Of course, that employer is also required to make sure the employee ends up receiving the full minimum wage, but we are talking here about employers who are dodging the law. A devious employer could treat a non-tipped employee as a tipped employee and then fraudulently take the tip credit on the other half of that employee’s wages, even if the employee didn’t earn any tips at all.

If the employer operates a tip pool, he might try to get away with counting some of the tipped employees’ tips as a tip credit applied to the non-tipped employee’s wages, even though that would be illegal and certainly unfair to the tipped employees.

Applying the tip credit to non-tipped work

This one is tricky, and definitely illegal.

Suppose Jane works as a waitress at an OKC restaurant that pays the minimum base pay of $3.625/hour and notifies employees that it is taking the tip credit. Let’s say Jane puts in an 8-hour shift. Let’s also say that she is assigned to do 2 hours of untipped work mopping floors, cleaning windows, etc. Then she waits tables during the other 6 hours, earning $60 in tips.

How much should Jane be paid?

Here is how her employer violated the law: He paid her base pay of $3.625/hour for 8 hours of work. That’s $29 for the 8-hour shift. Her tips are more than enough to cover the remainder of the minimum wage under the tip credit. Jane earned $29 base pay + $60 in tips = $89.

What’s wrong with that? The employer cannot treat Janes’ untipped work as if it was tipped work. Federal law says an employer can require a tipped employee to spend up to 20% of one’s work week on untipped work and treat it all as tipped work. However, Jane spent 2 out of 8 hours on untipped work, that’s 25%.

Her employer should pay her $7.25/hour for the two hours of untipped work and $3.625/hour in base pay for the six hours of tipped work. Jane should take home a total of $96.25 in minimum wage, base pay and tips. That’s an extra $7.25 for one eight-hour shift. If Jane works 220 days a year, that’s an extra $1,600.

Again, if an employee spends more than 20% of the work week on untipped duties, the employer must split up the tipped and untipped work and pay the full minimum wage on the untipped work, applying the tip credit only on the tipped worked.

All of this was settled in 2011 in a federal civil suit that several Applebee’s employees brought against the national restaurant chain. A similar complaint was brought in 2012 against Darden Restaurants, which owns Olive Garden, Red Lobster and Long Horn Steakhouse.

Abusing the tip pool

The term restaurant workers use when employers abuse the tip pool is “tip stealing.” Tip stealing is definitely illegal. The bottom line is this: there is no circumstance in which an employer should ever keep any portion of any tipped employee’s tips.

Tip pools are allowed when operated correctly. In some restaurants, waiters and waitresses share table-waiting duties, resulting in several employees providing service to a single table. Who gets the tip? If the restaurant operates a tip pool, the tips are pooled and then divided fairly among all tipped employees.

However, it is against the law for any portion of that tip pool to go to a non-tipped employee or to the employer. That’s tip stealing.

Tips belong to the employees who earned them. That’s the law.

For More Legal Information from Our Oklahoma Lawyers

Are you an Oklahoma waiter, waitress or other tipped employee in Oklahoma who is being ripped off by your employer? Are you receiving the full minimum wage? Are you being paid for your overtime? Are you being allowed to keep your tips?

In Oklahoma, the statute of limitations on tipped employee wage violations is two years, and it is three years if the violations were willful. That means that if you are a tipped employee with a legitimate civil claim, you could receive up to three years of back pay, along with other possible damages.

Hasbrook & Hasbrook enjoys handling employment claims, because we believe Oklahoma workers are entitled to every penny they earn. If you are being treated unfairly, contact us for a free consultation. You reach us by telephone (866-416-4737), email (cth@hasbrooklaw.com) or use our website contact form: Contact Us.