Tip sharing: Minimum wage still required for tipped employees

Many workers rely on tips to make a living. Wait staff, bartenders, baristas, hair stylists, and cleaning staff are just some examples of employees who rely on tips.

One common practice in industries where tipping is the norm is tip sharing. Tip sharing involves pooling tipped employees’ earnings and dividing them among employees. The tips may be divided among tip-receiving employees and other employees such as dishwashers, bussers, cooks, and others who don’t commonly receive tips themselves.

Most states allow for tip sharing, but there are certain rules and limitations that apply. Here are two important things to remember:

  • Minimum wage requirements: Tip-earning employees are only required to place tips in a pool that exceed minimum wage. Employees are not required to share tips if their total earnings equal less than minimum wage.
  • Employers excluded: Employers cannot take part in tip sharing. Tip sharing is only for employees who receive tips – not those who employ them.

When an employer takes tips from a tip pool, or when a tipped employee is earning less than minimum wage, it may be time to speak to an employment law attorney about what is happening.

Although tip pooling is legal in many states, employers must follow the law. When they don’t, they can be held accountable.

Talk to an attorney today: Call Alan Lescht & Associates, P.C., at 202-463-6036 for answers to your questions about tip sharing – and to learn what to do if your employer is violating the law.

Obama Administration unveils major changes to overtime law

POTUS overtime

The Department of Labor formally announced a substantial change to federal overtime regulations. Specifically, the overtime threshold for employees in professional, administrative and management roles will increase from $23,660 to $47,476. This news was formally announced by Vice President Joe Biden, Labor Secretary Thomas Perez and Senator Sherrod Brown (D.-Ohio). The increase is expected to go into effect on December 1, 2016, barring Congressional action.

Labor groups and others applauded the move. Jared Bernstein, a former economist for Vice President Biden and a senior fellow at the Center on Budget and Policy Priorities, stated “[T]his is one of the most important measures that the Obama administration has implemented to help middle-wage workers.”

What are the practical implications for overtime wages?

According to the Department of Labor, the increased threshold is likely to impact approximately 4.2 million salaried employees across the United States. Businesses are likely to react to the increase in one of three ways.

  • For qualifying employees who are already close to the threshold, employers may simply raise employee salaries in order to avoid having to pay overtime
  • Alternately, employers will convert employees to hourly employees, who will then be required to track their time so they can receive proper amounts of overtime pay
  • Employers may convert an employee from salaried to hourly and reduce an employee’s base pay in order to account for the overtime pay they will likely receive going forward.

Going forward, it will be worth watching to see how employers comply with these new regulations.

Anyone not receiving proper overtime pay has the right to bring a claim for unpaid overtime. Contact Alan lescht and Associates today if you believe your employer owes you overtime wages.

Sources: Millions more workers would be eligible for overtime pay under new federal rule, Jonnelle Marte, Washington Post, May 17, 2016

Exploitation of undocumented workers: They still have legal rights

A recent article in The Tennessean looked at the issue of employers’ failure to pay undocumented workers. The article highlighted the protections available to such workers when their employers exploit them.

According to a 2004 study by the Urban Institute, undocumented workers made up about 5 percent of the U.S. workforce. Although it is illegal for employers to hire undocumented workers, they are bound by the Fair Labor Standards Act to provide minimum wages, overtime pay, and other protections once they do. Further, there is no legal residency requirement to file a complaint in American courts, which means that even illegal workers can file complaints against employers failing to comply with the Fair Labor Standards Act.

The Worker’s Dignity Project-a Nashville-based nonprofit-seeks to educate immigrant workers of their rights and assist them in securing those protections.

Many immigrant workers, both legal and illegal, report that some employers neglect to pay them properly for their work and then threaten deportation if they complain. Complaints filed in the U.S. District Court for the Middle District of Tennessee showed a variety of claims, from accusations of failure to pay overtime wages to painters, to exploiting Mexican migrant workers through federal guest worker programs.

According to a Nashville attorney who represents such workers, employers sometimes threaten to call police or immigration authorities and then continue to work immigrants without paying them. Because of the situation of such workers, it is easy for employers to fail to pay full wages and come up with excuses.

Some advocates say the problem is more widespread than is readily visible, since many undocumented workers do not come forward.

According to an Immigration and Customs Enforcement spokesman, the primary focus of the agency is not to find and deport illegal workers, but to prevent employers from knowingly hiring, exploiting and trafficking illegal workers.

Programs similar to the Workers’ Dignity Project exist in other cities, such as Austin, Texas and Long Island, New York.

Advocates for immigrant workers say that such exploitation is not only contrary to basic human rights, but that it also depresses wages, benefits and working conditions for all workers.

Source: The Tennessean, “Immigrants turn to courts when wages aren’t paid: legal, illegal workers are protected from threats, exploitation,” Brandon Gee, 25 Jan 2011.