Tips Fair Labor Standards Act

News & Analysis as of

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

Tips Belong To Tipped Employees, Regardless Of Whether Employer Takes Tip Credit, Says A Federal Appellate Court

The U.S. Court of Appeals for the Ninth Circuit upheld a U.S. Department of Labor (DOL) rule prohibiting employers from requiring employees to share tips with non-tipped employees, even if the employer does not take the tip...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 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

DOL May Enforce Rules Extending Tip Pooling Restrictions

Since 2010, the law has been in flux as to whether certain restaurant employees may or may not be allowed to participate in tip pools, particularly in states located in the jurisdiction of the U.S. Court of Appeals for the...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

Is Your Tip Pool Policy a Recipe for Trouble?

In a recent blog post, we highlighted the trend amongst hoteliers and restaurateurs toward adopting service charge models to meet the rise in state and local minimum wage requirements. Although “no-tip” and “service charge”...more

Chebotnikov v. LimoLink, Inc.: a Cautionary Tale Concerning the Use of Forum-Selection Clauses

At the end of last year, a federal court in Massachusetts found that a forum selection clause in an Iowa company’s standard form service-provider agreement did not apply to claims asserted under the Fair Labor Standards Act...more

UPDATE: Employee Tip Pooling – Don’t Say We Didn’t Warn You!

We have talked with you in the past about the risks of allowing employees to pool or share tips. This is a pretty common practice in the food service industry, but there can be concerns because of the complexity of compliance...more

A Legal Tipping Point – Are No-Tip Policies the Wave of the Future?

In this country, there are thousands of employees who earn their living off tips or gratuities they receive from customers. Over the last several years, there has been a movement afoot, particularly in the restaurant...more

Hospitality, Food and Beverage Industry Newsletter

We are pleased to share the first edition of our Hospitality, Food and Beverage Industry Newsletter with you. This Newsletter addresses important recent legal developments affecting the hospitality and restaurant industry and...more

DOL Announces Increase in Minimum Wage Rate for Federal Contractors

The Department of Labor (DOL) has announced that the minimum wage for certain federal contracts will increase to $10.15 per hour beginning January 1, 2016. Additionally, the minimum cash wage that generally must be paid to...more

Fifth Circuit Tips Its Hand as to Analysis of FLSA’s Tip Credit

Restaurants throughout the Fifth Circuit, and even beyond, should review the recent decision of Montano v. Montrose Restaurant, which discusses the often tricky and always fact-intensive question of whether a restaurant...more

Fifth Circuit Rules on Tip Pooling

In Montano v. Montrose Restaurant Associates, Inc., the U.S. Court of Appeals for the Fifth Circuit was presented with what may seem like an easy issue:  does including a “coffeeman” in a tip pool invalidate the tip credit? ...more

Navigating the Treacherous Waters of Tipped Employee Wages

As evening sets, many restaurants will find themselves bustling with customers and loyal patrons eager to put the day's work to rest. But while managers focus on reservations, inventory, food allergies, and table checks,...more

West Virginia DOL Withdraws Proposed Emergency Wage and Hour Regulations

In welcome news for employers, the West Virginia Department of Labor (WVDOL) has withdrawn a set of emergency regulations that would have significantly revamped state wage and hour requirements and created conflicts with...more

Tip-Related Claims Will Continue to Be Served Up as the Lawsuit du Jour Against the Hospitality Industry in 2015

The hospitality industry is particularly fertile ground for a wide variety of wage and hour issues, which continue to plague management through steadily increasing federal and state department of labor investigations and...more

FAQs on Compliance With the Federal Tip Credit

Many employers in the hospitality industry employ individuals who receive customer tips or gratuities in the ordinary course of their work day. These tips may serve as an offset against an employer’s minimum wage obligations...more

Ongoing Confusion About Tips, Even From The White House

Recently, I explained that revising the FLSA regulations will not be easy, and highlighted tip credits as one such area in particular. In my last post, I discussed yet another case involving the miscalculation of wages for...more

One “Tip” That Won’t Soon Be Forgotten

Recently, Philadelphia sports bar and restaurant chain Chickie’s & Pete’s (“C&P”) signed a consent judgment with the Department of Labor agreeing to pay current and former employees more than $6.8 million in back wages and...more

As if Employers Needed Another Reminder, Here Are 8.4 Million More Reasons to Get the Tip Credit Right

A couple of weeks ago, a Philadelphia based sports bar chain entered into a consent order with the U.S. Department of Labor (DOL) and filed a request with the E.D. Pennsylvania for approval of a separate settlement with...more

Restaurant Industry Newsletter - January 2014

Tax Ruling Impacts the Use of Mandatory Service Charges - Executive Summary: Beginning on January 1, 2014, "mandatory gratuities" or service charges are no longer considered "tips" by the Internal Revenue Service, and...more

Florida's Minimum Wage Is Now $7.93

Florida's minimum wage rate increased to $7.93 effective January 1, 2014. As we reported in November, Florida's minimum wage law requires the Florida Department of Economic Opportunity to recalculate Florida's minimum wage...more

New "tipping" rules for 2014: Are you ready?

Employer practices with tips at hotels and restaurants have spawned a lot of employee discontent, class actions and other litigation. Some employers have withheld all or a portion of employee tips to cover administrative...more

New IRS Rule Affecting Hospitality Employers Takes Effect January 1, 2014

The IRS will begin enforcing a new rule concerning the taxation of automatic gratuities on January 1, 2014. Specifically, employers must start treating automatic gratuities – that is, charges that are compulsory to customers...more

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