HR Management & Compliance

FLSA: Were Restaurants’ Practices for Tip Credits and Tip Pools Illegal?

By Tom Harper, The Law and Mediation Offices of G. Thomas Harper, LLC

In 2012, a group of servers that eventually included 220 employees who worked at two St. Augustine seafood restaurants sued their employers, claiming unpaid wages and overtime under Florida law and the federal Fair Labor Standards Act (FLSA). The Florida federal court’s recent decision in the case illustrates some of the issues associated with wages paid to tipped employees.

Two St. Augustine restaurants, Saltwater Cowboys and Creekside Dinery, required their servers to contribute to a “tip pool” that included the table busers, dishwashers, kitchen helpers, cooks, and bartenders at each restaurant. As they were allowed to do under Florida and federal law, both restaurants took a “tip credit” against their minimum wage obligations based on a portion of the tips each server received.

The servers who brought the lawsuit alleged that the restaurants “operated an invalid tip pool,” which prevented them from using the tip credit to satisfy their minimum wage obligations. They also claimed that the restaurants unlawfully took a tip credit by requiring them to participate in a tip pool with employees who didn’t customarily receive tips, including cooks and dishwashers. The servers claimed the restaurants owed them back pay for the difference between their wages and the full minimum wage.

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