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On Behalf of | Jun 29, 2015 | Employee Rights, Wage & Hour Laws |

We’re seeing more and more wage abuse and wage theft. One of the latest trends concerns illegal tip pooling.

If you’re employed as a tipped employee who relies upon tips for income, such as a waiter, waitress or bartender, the fact that you earn income through tips allows your employer to lawfully pay you only $2.13 per hour, despite the fact that the minimum wage in New Jersey is currently $8.38 per hour and the federal minimum wage is currently $7.25 per hour. This is a tremendous boon to bar and restaurant owners and others who employ traditionally tipped employees.

That boon, however, is not without restrictions. In order for your employer to take advantage of what is known as the “tip credit” (the legal mechanism that allows them to credit a portion of your tip income to the employer’s obligation to pay the minimum wage) the employer must strictly comply with federal regulations governing the tip credit. One of the most common violations of the tip credit is when an employer requires employees to participate in a “tip pool” whereby they are required to “share” their tips with other employees. Commonly, servers will be required to “tip out” bus people and bartenders. 

This is fine. But, when your employer requires you to tip out members of management, kitchen employees, such as cooks, dessert preparers, dish washers, and other “back of the house” employees, the employer is almost certainly violating the law regarding tip credit and, effectively, stealing your wages. Unfortunately, this type of wage theft is not uncommon in the restaurant industry. It’s not enough for an employer, apparently, to pay you only one third or less of the current minimum wage; some of them will attempt to take for themselves a portion of your tips by having the tips allocated to “the house” or to managers. They will sometimes charge customers “gratuities” for large parties or catered events, but will not actually turn those gratuities over to the servers who earn them.

If your employer is forcing you to share tips with employees that you don’t believe are entitled to them, or forcing you to share tips with management or “the house” the employer may very well be in violation of state and/or federal minimum wage laws. If that is the case, the employer becomes liable to you for the difference between $2.13 (or whatever they are paying you per hour) and the current minimum wage for every hour that you’ve worked under the unlawful tip pooling scheme (subject, of course, to the statute of limitations).

We fight wage theft.