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Tip sharing may stir many wage and hour disputes

A tip dropped on the table or added to a credit card payment can be a statement of dissatisfaction or a generous thank you for prompt and courteous service. For many in the service industry in Tennessee, tips often mean the difference between making a living and struggling to survive. However, a proposal currently circulating in the U.S. Department of Labor is considering a measure that may create a tense atmosphere between servers and employers, as well as opportunities for many wage and hour disputes.

Some who receive tips do not earn minimum wage, so the tips are meant to supplement their hourly pay. For others, the tips are offered by customers in addition to their minimum wages. It is these employees whose pay will be affected if the proposal becomes law. What the DOL suggests is allowing employers to pool tips from those who receive gratuity and then divide the total among back-of-house employees, such as dishwashers and cooks.

There are two main concerns about tip sharing. First, it may cause unscrupulous employers to drop the wages of those back-of-house employees below minimum and use the tips to compensate the difference. Second, tip sharing would give ownership of the tips to the management, who could use it for other purposes, such as repairs or renovations. There is an additional question about salaried workers, like mangers, taking a share of the tips.

Tennessee workers in the service industry may have a fight ahead of them, but many may already be dealing with the struggle of wage and hour disputes. The law requires just pay for hours worked and fair overtime wages. Those who do not receive what they deserve from their employers have the right to seek the counsel of an attorney.

Source: Chicago Tribune, “Who’s really going to get your server’s tips when they’re pooled together? Proposed change would allow employers to pocket gratuities“, Robert Reed, Feb. 9, 2018