Tip Pool Violation

While the FLSA allows employers to require employees to share or “pool” tips with other eligible employees, it can be a violation of the law if you are required to share your tips with an employee who is not allowed to be included in the tip pool.

COMMON TIP POOL VIOLATIONS COMMITTED BY EMPLOYERS: DO ANY OF THESE APPLY TO YOU? IF SO, PLEASE CALL OR MAKE AN INQUIRY THROUGH THE WEBSITE

• You are required to share your tips with a manager or supervisor. Managers and supervisors include any employee (1) whose primary duty is managing the enterprise or a customarily recognized department or subdivision of the enterprise; (2) who customarily and regularly directs the work of at least two or more other full-time employees or their equivalent; and (3) who has the authority to hire or fire other employees, or whose suggestions and recommendations as to the hiring or firing are given particular weight.

A manager or supervisor is only allowed to keep a tip from a customer if they were the only employee who provided service to the customer.  For example, a restaurant manager who serves their own tables may keep the tips from customers, but a manager who assists a server with their tables can not keep any of the tips. 

• You are required to share your tips with the owner. Business owners who own at least 20% percent may not keep employees’ tips.

• If you are an employee who receives tips and your employer requires you to share your tips with employees who do not regularly and customarily receive tips, such as back-of-the-house employees, you may have a claim for unpaid tips if you are paid less than $7.25 an hour.

If you are paid less than $7.25, you may also be owed the difference between your regular hourly rate and $7.25 in addition to the tips that were withheld from you.  If your employer pays you $2.13 an hour and your employer committed a tip pool violation, you could be owed the difference between $7.25 – $2.13, which is $5.13 for all the hours you worked within the statutory time period, plus liquidated damages, which is 2x the amount. This means if your employer committed a tip pool violation, you can recover:

(1) the wrongfully withheld tips, 

(2) the difference between your regular hourly rate and $7.25, and

(3) liquidated damages, which is twice the total amount.