When you work in the service industry, and especially when you depend on tips for part of your income, you can sometimes find yourself vulnerable to unscrupulous employers, or you can lose out when employers simply don't understand the laws that are in place to protect you. The rules regarding tipped employees are somewhat more complicated than those for employees who make a set hourly wage, so it's important to understand your rights and protections. Take a look at what you need to know about your legal protections when you're a tipped employee.
Tips and the Minimum Wage
One of the first things that you learn when you work for tips is that your employer doesn't have to pay you the same minimum wage that they would have to pay a non-tipped employee. Or do they? It's a common misconception that tipped employees simply make a lower hourly wage, and tips are supposed to make up the difference. That's true to an extent, and in many cases you'll make more than the minimum wage on shifts when the tips are good.
But what happens when you work a slow shift, or when several customers decide to leave no tip at all? You don't just have to accept that you didn't make any money for that shift. The law says that if you don't make at least minimum wage between your hourly wage and your tips, your employer has to make up the difference. That means that if you make no tips on a particular shift, you should be paid the state or federal minimum wage for those hours – not the tipped employee wage.
Some states have even stricter laws protecting tipped employees. In California, for example, there is no tip credit – your employer has to pay you the regular minimum wage in addition to your tips. Be sure to check the laws of your state to be sure that you're making what you're supposed to be making.
Service Charges Instead of Tips
For a long time, it's been common for restaurants to charge a minimum gratuity on large parties. In recent years, some restaurants have begun to call this a "service charge" instead. The name change is significant – customers can usually opt out of a gratuity, even a so-called mandatory gratuity, but they're legally obligated to pay a service charge.
The problem is that unlike a gratuity, an employer does not usually have to give a service charge to the employee that does the serving. The employer can split up the service charge among various employees, or even keep the whole thing. Customers, on the other hand, believe the service charge functions as a tip, and therefore may not leave you any additional money as a tip.
Some states, like Washington, protect tipped workers by mandating that the employer explain to the customer exactly where the service charge is going. That way, the customers knows whether their service charge is going to be your tip, if it's going to be split up between several different employees, or if the restaurant keeps it. If you work at a restaurant that includes a service charge on the bill, be sure to find out where that goes, and be aware that if the customer is not informed of where the service charge goes, you might make less in tips.
Tip pooling is the practice of having tipped employees give a portion of their tips to be distributed among other employees, like busboys or bartenders. This practice is legal in most states, but there are a few caveats intended to protect employees from having to part with too much of their hard-earned money.
You can't be required to pool so much of your tips that you don't still make the minimum wage. Your employer can't keep any part of your tips – they have to be redistributed among other staff members. What's more, your tips can't be shared with employees who don't customarily receive tips, like the cook or the dishwasher.
It's up to you to be aware of your legal protections. If you're being taken advantage of by an employer who doesn't understand the rules or just isn't following them, you may have a case for a lawsuit against them. Consult an employment attorney in your area—like Timothy P O'Brien or another firm—for help.