RESTAURANT & SERVICE INDUSTRY EMPLOYEES

Metro Diner in Jacksonville, Florida to pay $154,000 in back wages to 59 employees for FLSA violations of failure to pay minimum wage and overtime.

11/17/2016: An investigation by the U.S. Department of Labor’s Wage and Hour Division’s Jacksonville District Office found that Windy City Doc Holding LLC, doing business as Metro Diner, violated minimum wage and overtime provisions of the Fair Labor Standards Act.

sandwichSpecifically, the employer made illegal deductions from workers’ pay when it charged servers for their uniforms – that resulted in them earning less than the legally required federal minimum wage of $7.25 per hour in the weeks that they paid for those items.

The employer’s practice of sharing the tips of tipped employees with non-tipped workers, such as dishwashers, also contributed to the minimum wage violations for affected servers.

The employer also calculated overtime incorrectly when it based servers’ overtime rates on time and a half of their direct cash wages, rather than basing it on the full minimum wage, as required.

If you feel that your employer has not compensated for the overtime hours you have worked you may call  (954) 948-8130  for a FREE strictly confidential consultation about your claim for violation of the minimum wage and/or unpaid overtime wage laws.  Or you can complete the simple form below for submission to us. 

SCHAEFER v. WALKER BROS (7th Cir. 2016) decision on tip credits for non-server time and adequacy of poster notice to servers

waitress“Through corporations he controls, Ray Walker operates six Original® Pancake House restaurants in Illinois. Robert Schaefer, who worked as a server at three of these restaurants, contends that they violate the Fair Labor Standards Act, 29 U.S.C. §§ 201–19, an its state equivalent the Illinois Minimum Wage Law, 820 ILCS 105/1 to 105/15. Federal and state laws provide that tips count toward the minimum wage and permit employers to pay less in the expectation that tips will make up the difference. Both statutes require some cash payment from the employer, however, no matter how much a worker receives in tips. In Illinois the employer must pay at least 60% of the normal minimum wage. 820 ILCS 105/4(c). This is called the tip-­credit rate in both state and federal nomenclature. Because the Illinois floor is higher than the federal minimum set by 29 U.S.C. §203(m)(1), the restaurants paid all server the Illinois rate.

Schaefer contends that, until May 2011, the restaurants failed to give servers the information that §203(m) requires as a condition of paying a tip-­credit wage. (In May 2011 the restaurants started using a brochure designed by the Department of Labor to implement a regulation that took effect that month. 29 C.F.R. §531.59(b). Schaefer concedes that this notice is adequate.) This claim is based exclusively on federal law and is limited to Schaefer plus the 11 who opted in.

Schaefer’s other claim affects all servers. He contends that servers at the restaurants spent some of their time doing non-­tipped duties such as slicing mushrooms and tidying up their service areas, and that the restaurants had to pay the full minimum wage for the time that the class members spent on the non-­tipped work. This contention rests on both state and federal law, but Schaefer relies exclusively on federal regulations and precedents, which both sides have assumed are equally applicable under Illinois law. Like the district court, we shall do likewise. The district court granted summary judgment to the restaurants. 2014 U.S. Dist. LEXIS 177157 (N.D. Ill. Dec. 17, 2014).

We start with the dual-jobs claim, which applies to all of the servers. Task lists posted at the restaurants, and affidavits from some of the servers, show that they were assigned to a variety of tasks in addition to taking customers’ orders and delivering food. They were required to wash and cut strawberries, mushrooms, and lemons; prepare applesauce and jams by mixing them with other ingredients; prepare jellies, salsas, and blueberry compote for use; restock bread bins and replenish dispensers of milk, whipped cream, syrup, hot chocolate, and straws; fill ice buckets; brew tea and coffee; wipe toasters and tables; wipe down burners and woodwork; and dust picture frames. Servers would rotate among these tasks; some servers apparently never performed some of these tasks. Different servers estimated that these duties took between 10 and 45 minutes daily, depending on which tasks were assigned on a given day and the server’s experience and aptitude with them.

The Supreme Court told us in Sandifer v. United States Steel Corp., 134 S. Ct. 870, 880 (2014), that the Fair Labor Standards Act does not “convert federal judges into time-­study professionals” and require every minute to be accounted for. Sandifer holds that, when the “vast majority” of employees’ time qualifies for a particular treatment under the Act, that treatment can be applied to the entire period. Id. at 881. Given the flexibility of words such as “related” and the 20% cap for untipped duties, and given how much less than 20% of working time these servers spent on untipped duties at these restaurants, the possibility that a few minutes a day were devoted to keeping the restaurant tidy does not require the restaurants to pay the normal minimum wage rather than the tip-­credit rate for those minutes.

Now we turn to the question that is pertinent to the 12 plaintiffs under the Fair Labor Standards Act: whether the restaurants told their servers of the rules governing tip-­credit wages.

It would be hard to fault an employer for providing exactly the information the Department of Labor then required, in the Department’s own words. Schaefer does not contend that he was unable to keep all tips he received. The handbook and poster together supply the restaurants’ workers with the three pieces of information that we believe constitute the statutory minimum.

AFFIRMED”

Read entire decision by clicking link below:

In the United States Court of Appeals For the Seventh Circuit

No. 15-­1058

ROBERT SCHAEFER, et al.,

Plaintiffs-­‐‑Appellants,

v.

WALKER BROS. ENTERPRISES, INC., et al.,

Defendants-­‐‑Appellees.

timeclockIf you feel that you have not been compensated for the hours you have worked you may call the law office for a FREE strictly confidential consultation about your claim for minimum wage or unpaid overtime wage violations at: (954) 948-8130. Or you can complete the simple form below for submission to us.  Please be advised that by merely submitting this form, no Attorney-Client relationship is formed with the law firm.   You must provide your name,  home or cell phone number, your email address and your zip code in the form.  We look forward to discussing your possible minimum wage and/or overtime pay violations claim We are passionate about defending and enforcing workers’ rights for unpaid wages.

The application of the Fair Labor Standards Act (FLSA) to employees who receive tips

Call (954) 946-8130 for a free telephone consultation with a Florida lawyer about your unpaid overtime and minimum wage claim.

Tipped Employees, Minimum Wages, Tip Credit & Tip Pools

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. Only tips actually received by the employee may be counted in determining whether the employee is a tipped employee and in applying the tip credit. Violations are rampant in the restaurant industry in Florida.

Retaliation under FLSA

Tip Credit: Section 3(m) of the FLSA permits an employer to take a tip credit toward its minimum wage obligation for tipped employees equal to the difference between the required cash wage (which must be at least $2.13) and the federal minimum wage [fedeeral minimum – cash wage = tip credit]. Thus, the maximum tip credit that an employer can currently claim under the FLSA is $5.12 per hour (the minimum wage of $7.25 minus the minimum required cash wage of $2.13).

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 and do not interact directly with customers.

Requirements for Compliance with  Minimum Wage Laws

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.

The employer may provide oral or written notice to its tipped employees informing them of items 1-5 above. An employer who fails to provide the required information cannot use the tip credit provisions and therefore must pay the tipped employee at least $7.25 per hour in wages and allow the tipped employee to keep all tips received.

Employers electing to use the tip credit provision must be able to show that tipped employees receive at least the minimum wage when direct (or cash) wages and the tip credit amount are combined. If an employee’s tips combined with the employer’s direct (or cash) wages of at least $2.13 per hour do not equal the minimum hourly wage of $7.25 per hour, the employer must make up the difference.

Retention of Tips: A tip is the sole property of the tipped employee regardless of whether the employer takes a tip credit. [1] The FLSA prohibits any arrangement between the employer and the tipped employee whereby any part of the tip received becomes the property of the employer. For example, even where a tipped employee receives at least $7.25 per hour in wages directly from the employer, the employee may not be required to turn over his or her tips to the employer.

Tip Pooling: As noted above, 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. The FLSA does not impose a maximum contribution amount or percentage on valid mandatory tip pools. The employer, however, must notify tipped employees of any required tip pool contribution amount, may only take a tip credit for the amount of tips each tipped employee ultimately receives, and may not retain any of the employees’ tips for any other purpose.

Dual Jobs: 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. The FLSA permits an employer to take the tip credit for some time that the tipped employee spends in duties related to the tipped occupation, even though such duties are not by themselves directed toward producing tips. For example, a waitperson who spends some time cleaning and setting tables, making coffee, and occasionally washing dishes or glasses is considered to be engaged in a tipped occupation even though these duties are not tip producing. However, where a tipped employee spends a substantial amount of time (in excess of 20 percent in the workweek) performing related duties, no tip credit may be taken for the time spent in such duties. .

Service Charges: A compulsory charge for service, for example, 15 percent of the bill, is not a tip. Such charges are part of the employer’s gross receipts. Sums distributed to employees from service charges cannot be counted as tips received, but may be used to satisfy the employer’s minimum wage and overtime obligations under the FLSA. If an employee receives tips in addition to the compulsory service charge, those tips may be considered in determining whether the employee is a tipped employee and in the application of the tip credit.

Credit Cards: Where tips are charged on a credit card and the employer must pay the credit card company a percentage on each sale, the employer may pay the employee the tip, less that percentage. For example, where a credit card company charges an employer 3 percent on all sales charged to its credit service, the employer may pay the tipped employee 97 percent of the tips without violating the FLSA. However, this charge on the tip may not reduce the employee’s wage below the required minimum wage. The amount due the employee must be paid no later than the regular pay day and may not be held while the employer is awaiting reimbursement from the credit card company.

Typical Minimum & Overtime Violations for Tipped Employees

Minimum Wage Problems:

    Where a tipped employee does not receive sufficient tips to make up the difference between the direct (or cash) wage payment (which must be at least $2.13 per hour) and the minimum wage, the employer must make up the difference & it is an FLSA violation if they don’t do that.

    Where a tipped employee receives tips only and is paid no cash wage, the full minimum wage is owed by the employer to the employee.

    Where deductions for walk-outs, breakage, or cash register shortages reduce the employee’s wages below the minimum wage, such deductions are illegal. Where a tipped employee is paid $2.13 per hour in direct (or cash) wages and the employer claims the maximum tip credit of $5.12 per hour, no such deductions can be made without reducing the employee below the minimum wage (even where the employee receives more than $5.12 per hour in tips).

    Where a tipped employee is required to contribute to a tip pool that includes employees who do not customarily and regularly receive tips, the employee is owed all tips he or she contributed to the pool and the full $7.25 minimum wage.

Overtime Problems:

    Where the employer takes the tip credit, overtime is calculated on the full minimum wage, not the lower direct (or cash) wage payment. The employer may not take a larger tip credit for an overtime hour than for a straight time hour (i.e., $4.00 tip credit per hour for the nonovertime hours and $5.12 tip credit per hour for overtime hours).

    Where overtime is not paid based on the regular rate including all service charges, commissions, bonuses, and other remuneration.

A Florida labor lawyer can evaluate your claim for free. There is no fee or cost unless we recover overtime and/or minimum wages for you.

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UPDATED: July 2015

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