Florida and federal law allow restaurants and hotels to pay tipped employees minimum wage, less a credit of $3.02 per hour against tips received. Tips can be pooled and then redistributed to those who are in traditionally tipped positions. However, if an employer wrongly allows non-tipped employees to share in the tips (e.g., supervisors, maintenance, cooks, dishwashers, chefs and other back-of-the house employees), the employer loses the ability to take the $3.02 per hour tip credit.
In 2011, the U.S. Department of Labor (the “DOL”) issued a regulation regarding tip sharing. The regulations states that even if an employer pays full minimum wage to a tipped employee with no tip credit, it cannot require tipped employees to share their tips with those who work in positions that traditionally do not receive tips.
Over the past six years, a number of federal courts have been asked to enforce this regulation. Some judges have ruled that if an employer does not take a tip credit against the wages of servers who are paid at least minimum wage, then, the employer is allowed to have non-tipped employees share in a tip pool along with those in traditionally tipped positions. The key is that tipped employees must receive minimum wage (excluding tips) for every hour worked. Other judges have ruled otherwise.
Recently, the DOL announced that it was considering nullifying the 2011 regulation and asked for comments through early February 2018. According to Employment Law 360, the DOL has already received more than 2,800 comments. If the DOL nullifies its 2011 regulation, employers who pay their tipped employees minimum wage may be able to distribute tips to employees who work in non-tipped positions. I do not expect the DOL to take any action to change its regulation until the Fall 2018, at the earliest.
A number of restaurants and hotels have avoided the issue all together by imposing a fixed, non-discretionary service charge on meals. Among other things, those establishments need to make sure that their menus and guest checks clearly reflect that a mandatory service charge is being imposed. Imposing a service charge has its own wage and hour issues. As a result, all food establishments should discuss with their attorneys the best practices to comply with the wage and hour laws, including whether to impose a service charge or allow guests the discretion to tip their servers.