Servers, waiters, and other tipped employees are especially vulnerable to wage theft. The Department of Labor performed nearly 9,000 investigations of restaurants between 2010 and 2012, and found 83.8% of investigated restaurants had violated wage and hour laws. This post examines a common issue for tipped employees: whether an employer can pay the tipped minimum wage for time spent performing non-tipped work.

Tipped Employees Must Perform Tipped Work

Tipped employees are those who “customarily and regularly” receive tips, such as servers, waiters, and bartenders. However, tipped employees may spend a substantial amount of time performing non-tipped work. For example, a server may be required to clean restrooms, roll silverware, stock serving areas, or clean up at closing. Tipped employees are not earning tips for this work, but employers may be taking the “tip credit” for this time. The “tip credit” allows an employer to pay an employee the tipped minimum wage of $2.33/hour and use tips earned by the employee to ensure that the employee’s pay amounts to the minimum wage of $7.25/hour.

Tipped + Non-Tipped Work = “Dual Jobs”

If employees are spending a substantial amount of time performing both tipped and non-tipped work, they may be engaged in “dual jobs.”  A tipped employee who is performing “dual jobs” cannot be paid the tipped minimum wage for the amount of time spent performing their non-tipped work.

Federal regulations consider 20% of time spent performing non-tipped work as “substantial.” This means if a server works a five hour shift but spends one hour cleaning bathrooms and stocking, they are engaged in “dual jobs.” A business that does not “engage in interstate commerce” may not be covered by federal law; in that case, Wisconsin law applies, and a tipped employee can spend up to 30% of their time performing non-tipped work without being engaged in dual jobs.

“Dual Job” Workers Must Receive Regular Minimum Wage for Non-Tipped Work

If a tipped employee is engaged in “dual jobs,” the employer can only pay the tipped minimum wage of $2.33 for time spent performing tipped work. This means if a tipped employee is spending a substantial amount of time on non-tipped work, that time must be paid at the minimum wage of $7.25. Employers are required to keep records of how much time employees spend performing tipped and non-tipped work.

For example, suppose a restaurant regularly requires a server to arrive at 4:00 PM to conduct “opening” duties, like cleaning bathrooms, vacuuming floors, folding napkins, and rolling silverware. Dinner service begins at 5:00 PM, and the server begins taking tables and performing tipped work. The server’s last table leaves at 9:30 PM. At the end of the shift, the server must again do non-tipped work – move tables, polish silverware, clean bathrooms, etc. The server clocks out at 10:30 PM. The server has worked 6.5 total hours, but 2 of those hours consisted of non-tipped work. The restaurant does not keep clear records of tipped and non-tipped work, other than generally assuming the 4-5 PM period is non-tipped. These 2 hours amount to 30% of the server’s time spent performing non-tipped work. Under both federal and Wisconsin law, those 2 hours should be paid at the minimum wage of $7.25.

Other Issues for Tipped Employees: Tip Pooling

Another common problem for tipped employees is the employer’s use of invalid tip pools. Requiring tipped employees to share or “pool” their tips is allowed if tips are only shared between employees who regularly receive tips.

For example, a tip pool consisting of servers, bussers, and bartenders is allowed. But if tipped employees are required to share tips with employees who do not regularly receive tips, such as dishwashers, cooks, managers, or janitors, the pool is not valid. See our post “Server Tips, Tip Pooling, & Tip Pool Laws” for more information on tip pools.

If you are a tipped employee who regularly performs a substantial amount of non-tipped work, the FLSA allows for recovery of your wages, double damages, as well as attorney’s fees and costs. These cases are commonly handled on a contingent fee basis, meaning you will only need to pay attorney’s fees if you recover wages. Hawks Quindel offers a free consultation to anyone who believes they may have a wage and hour claim. We can be reached at (608) 257-0040.

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