Tip Credit

News & Analysis as of

New York State Department of Labor to Update Existing Minimum Wage Orders

As New York employers prepare for the December 1, 2016, implementation of the revised Fair Labor Standards Act (FLSA) overtime regulations, they should be aware of proposed regulations by the New York State Department of...more

Five Critical Wage and Hour Issues Impacting Employers

It is no secret that the wage and hour requirements found in the myriad of federal, state, and local laws and regulations present unique challenges to employers across the country. Those challenges are further complicated by...more

Federal Appeals Court Refuses To Reinstate Tip-Pooling Policies - Labor Regulation Banning Such Policies Upheld By 9th Circuit...

Restaurants and other hospitality businesses in the Western U.S. received bad news late yesterday as a federal appeals court refused to strike down a controversial tip-pooling regulation. The U.S. Department of Labor’s...more

Federal Court In Florida Is Latest To Reject DOL Regulation, Finds FLSA Does Not Require That Employees Receiving Full Minimum...

While Department of Labor regulations interpreting the FLSA remain the primary source of employer guidance regarding the Act’s requirements, they are not necessarily the final word on what federal wage law requires. This is...more

Employers Must Comply with DOL's Updated Posting Requirements

The Department of Labor (DOL) issued on July 27, 2016, regulations that require covered employers to update their Fair Labor Standards Act (FLSA) Minimum Wage posters and their federal Employee Polygraph Protection Act (EPPA)...more

Another Federal Court Thinks the DOL Is Out to Lunch On Tip Credit Rule

Seyfarth Synopsis: New decision from Northern District of Georgia rejects the DOL’s interpretation of the FLSA tip credit law. Holds that the FLSA does not regulate tips received by employees who are paid at least minimum...more

Seventh Circuit Serves Up Employer-Friendly Recipe For Compensating Tipped Employees

Many employers, particularly in the hospitality industry, pay tipped employees less than the minimum wage. They do so anticipating that tipped employees will receive tips from customers that push employees’ income above...more

Chicago Minimum Wage Increased Again On July 1, 2016, And Updated Notice Must Be Given To Employees

As previously reported in The Fast Laner, the Chicago Minimum Wage Ordinance incrementally increases each on July 1 of each year until it reaches $13.00 per hour in 2019. Therefore, as a reminder, effective July 1, 2016,...more

Seventh Circuit Upholds Tip Credit Pay for Related, Non-Tipped Duties

As those in the restaurant industry know well, federal and state law allow employers to pay tipped employees less than the required minimum wage with the expectation they will receive enough tips to make up the difference....more

Employers Limited in Service Fees Deductions From Credit Card Tips

Restaurants and some other businesses that use employees partially compensated by tips can claim a tip credit toward the Fair Labor Standards Act’s minimum wage requirements. However, the FLSA strictly regulates the servers’...more

Fifth Circuit Declines to Broaden Permitted Deduction of Credit Card Fees from Tips

The U.S. Court of Appeals for the Fifth Circuit concluded on June 14, 2016 that an employer may not deduct more than the actual credit card fees associated with liquidated credit card tips for employees without compromising...more

Fifth Circuit Addresses FLSA Tip Credits Once Again

The Fifth Circuit has had tipping on its mind, as the decision of Steele v. Leasing Enterprises, Ltd., represents its second opinion within ten months addressing this pay practice. On the heels of Montano v. Montrose, the...more

Here’s a Tip for You, Jack – Fifth Circuit Upholds Ruling on Restaurant Credit Card Offset

Life is filled with risky decisions. Should you take that new job? Should you put in an offer on that house that is just out of your price range? Should you really eat that last piece of cake when you’ve already had two?...more

Here's a tip: Don't skim from employee tips

Hospitality industry employers take note: If you claim a “tip credit” toward the minimum wage for any of your employees, you need to make sure that all tips are properly distributed to employees. A recent case from the Fifth...more

The Ripple Effect of New York State's Minimum Wage Increase - Part II: The Hospitality Industry

The hospitality industry in New York State, already facing potentially significant increases in labor costs due to upcoming increases in the minimum wage, will need to adjust policies and practices in anticipation of the...more

“Side Work” Lawsuits Brought by Restaurant Employees on the Rise

Ruby Tuesday is the latest restaurant chain to face a “side work” class-action lawsuit brought by employees who allege that they are underpaid pursuant to federal regulations. The suit against Ruby Tuesday involves thousands...more

California Employment Law Notes - March 2016

Nuclear Plant Maintenance Manager's Whistleblower Claim Was Properly Dismissed - Sanders v. Energy Northwest, 2016 WL 560809 (9th Cir. 2016) - David W. Sanders, a maintenance manager for Energy Northwest (a...more

Ninth Circuit Reverses District Court Decisions, Reviving U.S. Department of Labor Rule Restricting Tip-Pool Distribution

On February 23, 2016, in a surprise ruling, a divided Ninth Circuit Court of Appeals (which covers the states of California, Nevada, Oregon, Washington, Arizona, Alaska, Idaho, Montana and Hawaii) ignored its prior precedent...more

Ninth Circuit: FLSA's Tip-Pooling Restrictions Apply Regardless of Whether Employers Use Tip Credits

On February 23, 2016, the U.S. Court of Appeals for the Ninth Circuit in a 2-1 panel decision upheld the U.S. Department of Labor’s (DOL) 2011 revisions to 29 C.F.R. § 531.52 applying tip-pooling restrictions to employers...more

Ninth Circuit Says DOL Tip Pooling Restrictions Apply Even if Employer Does Not Claim Tip Credit

Federal Department of Labor regulations have long prohibited employers from requiring that servers, hostesses and bartenders pool a portion of their tips to share with other restaurant employees such as bussers and cooks. For...more

Split Ninth Circuit Decision Clarifies the Limitations of Tip Pooling

In a split 2-1 decision, the Ninth Circuit Court of Appeals ruled in Oregon Restaurant and Lodging Association v. Perez (February 2016) that its 2010 decision in Cumbie v. Woody Woo, Inc. did not prevent the U. S. Department...more

Ninth Circuit Approves DOL Rule that Restricts Tip Pooling

Section 203(m) of the Fair Labor Standards Act (FLSA) allows employers of tipped employees to take a tip credit against the employer's minimum wage obligation if: (a) notice of the tip credit is provided, and (b) tipped...more

Ninth Circuit Limits Tip Pooling to Customarily Tipped Employees

In a decision with important implications for employers throughout the service industry, the federal Ninth Circuit Court of Appeals ruled on February 23 that employers cannot implement policies requiring tipped employees to...more

Ninth Circuit Rules Tip Pooling Arrangements That Share Tips With Employees Who Do Not Normally Receive Tips Violate Federal Law

In a game-changing event, on February 23, 2016, the U.S. Court of Appeals for the Ninth Circuit (the court that covers nine western states, including Washington, Oregon and California) in a 2-1 decision ruled that it is a...more

Bad News for Employers: In a Surprise, Ninth Circuit Upholds Tip Pooling Regulations

Unsurprisingly, and in direct response to the Woody Woo decision, in May 2011, DOL issued new regulations regarding tips. Under those regulations, DOL interpreted the FLSA such that tips are the property of the tipped...more

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