By: Tommy Eden
Leonzo Alvarado, a car wash attendant for Five Towns Car Wash, Inc. ("Five Towns") in New York claimed that Five Towns improperly benefited from the Fair Labor Standards Act tip credit because he claimed three supervisors improperly shared in the tip pool. Alvarado also claimed the Five Towns violated the FLSA by failing to inform him that a tip credit would be applied to his wages. Employers may pay tipped employees as little as $2.13 an hour if the employee makes enough in tips to reach the $7.25 minimum wage, but employers must provide advance notice to employees.
The Federal
District Judge was unable to find clear evidence that that the car wash failed
to provide Alvarado with proper tip credits notice or that the 3 others persons
included in the Tip pools were supervisors, and found that such were fact
questions were jury issues. The case is Alvarado v. Five Towns Car Wash.
Common Sense
Counsel: This is a great case to review DOL Tip Credit regulations.
Tipped
employees are those who customarily and regularly receive more than $30 per
month in tips. Tips are the property of the employee. The employer is prohibited
from using an employee’s tips for any reason other than as a credit against its
minimum wage obligation to the employee (“tip credit”) or in furtherance of a
valid tip pool.
The
requirement that an employee must retain all tips does not preclude a valid tip
pooling or sharing arrangement among employees who customarily and regularly
receive tips, such as waiters, waitresses, bellhops, counter personnel (who
serve customers), bussers, and service bartenders. A valid tip pool may not
include employees who do not customarily and regularly received tips, such as
dishwashers, cooks, chefs, and janitors.
Tip FLSA
Credit Requirements. The
employer must provide the following information to a tipped employee before the
employer may use the tip credit:
1) the amount of cash wage the employer
is paying a tipped employee, which must be at least $2.13 per hour;
2) the additional amount claimed by the
employer as a tip credit, which cannot exceed $5.12 (the difference between the
minimum required cash wage of $2.13 and the current minimum wage of
$7.25);
3) that the tip credit claimed by the
employer cannot exceed the amount of tips actually received by the tipped
employee;
4) that all tips received by the tipped
employee are to be retained by the employee except for a valid tip pooling
arrangement limited to employees who customarily and regularly receive tips;
and
5) that the tip credit will not apply to
any tipped employee unless the employee has been informed of these tip credit
provisions.
Dual Jobs are
those when an employee is employed by one employer in both a tipped and a
non-tipped occupation, such as an employee employed both as a maintenance person
and a waitperson, the tip credit is available only for the hours spent by the
employee in the tipped occupation. Knowing the regulations is your best tip to
say out of court.
Tommy
Eden is a partner working out of the Constangy, Brooks & Smith, LLP offices
in Opelika, AL and West Point, GA and a member of the ABA Section of Labor and
Employment Law and serves on the Board of Directors for the East Alabama SHRM
Chapter. He can be contacted at teden@constangy.com or 334-246-2901. Blog
at www.alabamaatwork.com and follow on
twitter tommyeden3
