In the month since we’ve written about Florida’s Tipped Minimum Wage, the US Department of Labor (USDOL) reported that three separate Restaurant owners were required to pay a combined $1.3 Million in back wages and damages due to workplace practices that were in violation of the Fair Labor Standards Act (FLSA). The scary part of these stories is not in the amounts awarded, but the idea that these practices are so commonplace that we don’t even realize we’re breaking the law.
One of the larger awards, more than a half a million dollars, was the result of owners who required servers to contribute a portion of their total tips back to the employer, who then distributed the money to cooks and dishwashers who were not tipped employees. Consequently, the employer paid servers less than the federal minimum wage of $7.25 as required. Additionally, the restaurant failed to pay required overtime wages to employees when they worked more than 40 hours in a week, and did not keep accurate records of all hours worked.[1]
Another large penalty, also over the half million mark, was to a restaurant owner who also fell victim to the practices mentioned above but, among other things, required servers and bartenders to pay for breakages, customer walkouts and ordering errors out of their tips, which reduced their pay to below the federal minimum wage. Employees were also required to work without pay at charity events.[2] The charity events idea is always a great discussion, because we can argue that the employees volunteered. That argument would not likely stand a chance, however, as the FLSA hardly ever permits employees to volunteer unpaid time to the employer!
The USDOL’s Wage and Hour Division reports that these issues are found across the nation. In addition to the violations mentioned above, the Division adds that it is common for them to find employers who are requiring employees to work exclusively for tips with no regard to minimum wage standards, taking illegal deductions from wages for credit card transaction fees and paying straight time for hours over 40.[3]
For the past month, Florida Restaurant Owners have been mostly lucky – none of the cases above were in our home state! However, earlier this month the Division announced that it will expand outreach, education and enforcement in the industry to more cities and states. While you never know when and if they might visit you, don’t wait to get things in order. Review your pay practices now to ensure you’re in compliance with FLSA. If you’re still unsure, contact your payroll professional today.
[1] https://www.dol.gov/newsroom/releases/whd/whd20161011
[2] https://www.dol.gov/newsroom/releases/whd/whd20160926-0
[3] https://www.dol.gov/newsroom/releases/whd/whd20161004