Many employees in Texas earn tips by waiting tables, mixing drinks, or parking cars. It is a common practice for employers to use tips to meet minimum wage and other pay requirements. Unfortunately, some employers do not follow the rules for tipped employees. This includes stealing tips, prohibited tip-sharing, or paying base pay of $3.20 instead of $5.76 for overtime hours.
If you are a tipped employee, and you suspect that you are not being paid your full wages, you should consult the experienced Dallas wage law lawyers at Rob Wiley, P.C.
The Rights of Tipped EmployeesAs a threshold requirement, an employer cannot use tips to meet minimum wage requirements unless workers typically get more than $30 in tips each month. Further, before counting tips toward wage requirements, an employer must specifically inform employees of how tips will be used. It is not enough to rely on industry practices.
Your Tips Belong to YouDon’t let your employer steal your tips. When a customer voluntarily leaves a tip, whatever the customer leaves that is more than the charge for the food or other goods or services is a tip. That tip belongs to the employee, not the employer, and employees cannot be forced to share their tips with management or owners.
Minimum Wage for Tipped EmployeesMinimum wage laws protect all employees, regardless of whether they are tipped. Employees have the right to receive the full federal or state minimum wage per hour, whichever is more generous to them. In Texas, the state minimum wage per hour is the same as the federal minimum wage, $7.25.
If tips are part of your compensation at work, your employer might try to pay you less than $7.25 per hour and count on your tips to make up the difference. Under some circumstances, this may be allowed. However, there are certain complex rules that your employer needs to follow.
Tip credits are a privilege for employers who follow the rules. Tip credits allow employers to pay tipped employees as little as $2.13 per hour in direct wages, but an employer will lose this credit if it does not ensure that its tipped employees are still making at least the standard minimum wage of $7.25 per hour after tips are added in. When an employee’s tips combined with an employer’s wages do not come out to equal the federal minimum wage, the employer must pay the difference.
An employment lawyer can help you hold your employer accountable if it fails to follow this rule.
Overtime for Tipped EmployeesTipped employees are entitled to overtime pay for overtime hours. However, employers oftentimes calculate the wrong overtime rate for tipped employees. If an employer claims a tip credit and pays its tipped employees $2.13 per hour, it may mistakenly calculate the employees overtime rate by multiplying $2.31 by 1.5 to get $3.20 per hour. This is wrong. What the employer is actually required to do is use the standard minimum wage of $7.25 to get the overtime rate and then deduct the tip credit. The tip credit is the difference between the standard minimum wage and what the tipped employee is paid. In other words, if an employee pays its tipped employee $2.13 per hour, the minimum wage for a tipped employee, it must calculate the employees overtime rate by multiplying $7.25 by 1.5 to get $10.88 and then subtracting the tip credit of $5.12 to get the overtime rate of $5.76 per hour.
Tip PoolingSometimes employers will require employees to put their tips into a tip pool that will be shared with other employees and divided among them. Certain requirements must be met for this practice to be permitted.
Your employer must let you know about a tip pool ahead of time, and your employer cannot make you pay an unreasonable amount into the pool. No matter what, you must always get at least the full minimum wage. If you made more tips than you end up taking home because your employer made you pool your tips with others, it can only count the tips that you actually took home against the requirement that it pay you a minimum wage.
Moreover, only employees who regularly get tips are allowed to be part of the tip pool if your employer claims a tip credit. Your employer cannot require you to share tips with employees who do not normally get tipped, such as a cook or a dishwasher in a restaurant. Tips in a tip pool must not be shared with supervisors, managers, or the employer.
Discuss Your Situation With a Wage and Hour Attorney in the Dallas AreaTipped employees are subject to complex rules, and sometimes employers fail to follow these rules. If your employer has violated the law, it can lose its tip credit and be required to pay you the full minimum wage on top of tips. Indeed, it is not uncommon for an employer to owe thousands of dollars. If you are a tipped employee and are not being paid fairly in a Dallas workplace, you should consult an attorney about what remedies you may have. Call us at (214) 528-6500 or complete our online form.