Here’s the general rule of thumb when employees receive tips.
They get to keep them.
As Jon Hyman pointed out in his blog post yesterday at the Ohio Employer Law Blog, there are certain exceptions to that rule, none of which involves sharing employee tips with managers and supervisors.
A bunch of restaurants found this out the hard way.
This week, the U.S. Department of Labor announced that it had recovered $230,353 in back wages for 274 workers after an investigation found the employer gave a portion of employee tips to restaurant managers – a practice not allowed by federal law.
The Fair Labor Standards Act prohibits employers, managers, and supervisors from keeping tips the business’ employees receive for any purposes, whether or not the employer takes a tip credit. However, managers and supervisors may contribute to mandatory tip pools and keep tips that they receive from customers directly for services that the manager or supervisor directly and “solely” provides.
Otherwise, the DOL stresses that “employers must know that tips are the property of tipped employees who earn them, plain and simple.”
Hey, before you go, don’t forget to register (here) for the return of The Employer Handbook Zoom Happy Hour: “Offboarding the C-Suite” on Friday, September 30, 2022 at Noon ET. It’s totally FREE!
My guest will be Bob Ellerbrock, who focuses his practice on executive compensation, employee benefits, and ERISA.
Bob and I will explore workplace investigations of executive wrongdoing, terminations, and resignations. We’ll also discuss common drafting errors in C-Suite employment and separation agreements, enforcing post-employment obligations, and communicating the change to your workforce.