Wage Laws for Waiters: What You Need to Know

The Fair Labor Standards Act (FLSA) obligates employers to pay at least the Federal minimum wage to covered, nonexempt employees. However, an employer of a tipped employee only has to pay $2.13 per hour if that amount plus their earned tips equals the sum of the Federal minimum wage. Under this law, the employee must retain all tips earned and regularly receive more than $30 in tips per month. 

It’s important to note here again that you must retain all of your tips as a server. So, if you find yourself in a situation where you’re forced to share your tips with a supervisor or the owner of a restaurant, that is against the law, and you have the right to file a complaint.

If you don’t make the Federal minimum wage between your hourly pay and your tips, your employer must make up the difference. If you couple this with any overtime, it can get tricky and often lead to miscalculations in pay.

Minimum wage laws have only come into existence since the early part of the 20th century. Basic labor protections like a 40-hour workweek, overtime protection, and a national minimum wage were only first enacted in 1938. However, in 1966, a vital amendment gave protection to hotel, restaurant, and other types of service workers who were previously excluded. This amendment introduced the new “subminimum wage” for tipped employees.

The new “tip credit” legislation provided employers an established way to permanently pay sub-wages to waitstaff by pushing the burden of fair wages onto the customer. Previously, tipping was only done as a token of appreciation between customer and server. As of now, the federal minimum wage is $7.25 an hour, which basically means as a tipped employee, you should make an additional $5.12 per hour in tips plus the $2.13 per hour to equal $7.25 an hour.

Surprisingly, the federal tipped minimum wage has stayed stagnant since 1991, making no provisions for inflation. Right now, your purchasing power as a waiter is at the lowest point it’s ever been. Still, the number of employers who have tipped employees like restaurants, casinos, salons, and other types of businesses is larger than ever before.

Between 2010 and 2012, The U.S. Department of Labor investigated almost 9,000 restaurants and found 1,170 tip credit infractions totaling nearly $5.5 million. Furthermore, they found that 5 out of 6 restaurants had a wage violation of some kind. Unfortunately, wage theft is more common for low-wage workers. One study reported that 17 percent of workers had reported being underpaid. There are nearly six million tipped workers in the U.S. with a median age of 30.

Every year, employers steal billions from their employees, which is a shocking figure. In the ten most populous states in the U.S., 2.4 million workers lose $8 billion every year in violation of the Fair Labor Standards Act. These violations impact the lives of those that can least afford the loss of earnings.

Wage theft can cause struggling families to fall below the poverty line and force them to use public assistance to get by. Wage theft doesn’t just hurt these individuals. It hurts local and state economies and even impacts other workers because it weakens their bargaining power for increased wages.

Wage theft comes from employers failing to pay workers the full amount they’re entitled to for their work. They may not pay the agreed-on amount, underpay on legally mandated minimums, refuse to pay for all hours worked, or refuse to pay overtime. Furthermore, wage theft can include off-the-clock violations like asking workers to come in and work unpaid before or after their shift. Denying meal breaks is another form of wage theft.

According to one study, workers who have suffered minimum wage violations were found to lose an average of $64 per week totaling $3,300 per year. And employers are becoming savvier to weaknesses in the scope of protection afforded by the FLSA. For instance, they are adopting business practices that muddle the classification of any employee, such as labeling them as a subcontractor instead of a regular employee. 

The Wage and Hour Division (WHD) of the U.S. Department of Labor agency is in charge of enforcing wage and hour laws. However, since its inception, the number of agents has stayed the same while the number of the U.S. workforce has exploded. There is one investigator for every 135,000 covered workers today compared to one for every 22,600 workers in 1948.

The incredible gap that comes from an insufficient number of investigators leaves a lot of room for flagrant violation. Many states don’t have the capacity to investigate or prosecute wage theft claims on their own and depend on the federal government to do so.

Even in states with their own enforcement powers, filing a wage theft claim is very difficult because it involves completing lengthy questionnaires, responding to rounds of mailed notices, and providing tons of documentation under the strictest of deadlines. If any deadlines are missed, or information is omitted, governing agencies can simply close the case.

All of the reasons outlined almost incentivize employers to violate the law because the chance of being caught is small. Unless it’s found they forged documents, they typically only have to pay a portion back to the employee, not even the total amount owed.

We’ve gone over what wage theft is, but here are some scenarios you may be familiar with, and that’s why you’re searching for a lawyer to help you with your waiter minimum wage claim.

Pocketing tips added to a credit card bill: In many states, your employer can legally take a percentage of your credit card tips to offset the cost of processing a payment through a credit card. For example, a credit card company charges 2.5% for processing. Your employer can legally reduce your tip by that amount. However, in some states, this is expressly forbidden, like in California. California imposes that business owners bear the burden of paying all costs associated with doing business. Maine and Massachusetts have similar laws concerning deducting credit card processing fees from the tips of waitstaff.

Keeping a cut of tips for themselves: Federal law forbids employers from keeping any portion of your tips even if you participate in a tip pool. No manager or supervisor is allowed to share in your tip pool.

Using tip money to pay non-serving staff: Say you have banquet servers or pastry chefs who work but don’t directly serve the customers. Employers are prohibited from using employee’s tips for any other reason than as a “tip credit” towards their minimum wage obligation.

Creating jobs for family or friends that are no-show: If you are involved in a tip pool, an unscrupulous employer or manager may routinely generate a position that is never filled and then take the cut from the tip pool for themselves.

Using tip money to pay underpaid staff: Again, employers are not allowed to use your tips to pay nonserving staff members like dishwashers. It’s against federal law.

Not paying overtime: Overtime hours for tipped workers cannot be figured at the reduced hourly wage. Any hours over 40 in a week span must be figured at the regular minimum wage, even with tips.

Dual jobs: If you serve for 4 hours a day, then switch to a different job that falls under a different classification for 4 hours, like cooking, your employer cannot pay those hours at sub wages.

Everyone is entitled to get paid for the hard work they perform. If you suspect you’ve been paid less than waiter minimum wage, a wage theft attorney may be able to help you reclaim the back wages owed to you.

We at Morgan & Morgan law firm consider ourselves to be wage theft busters. We’ve seen thousands of cases where someone thought they could get away with bullying the little person to line their own pockets. Illegal business measures need to be stopped, and we know how to tackle wrongdoers and make them pay up for their illegal schemes.

As waitstaff, you know how hard it is to hustle, how many times you have to smile when someone is rude to you, and having to go above and beyond. All of this with the expectation of receiving fair compensation for your labor just to have your employer shortchange you because they think they can.

Fortunately, the law is on your side, and we’d like to be too. If you or someone you love has been the victim of wage theft or suspect the waiter minimum wage law has been violated, contact us for a free, no-risk case evaluation, and let’s see what we can do for you.