Sophia Serrao
Thu, 05/12/2022
The Department of Labor recently recovered $624,000 in back wages for 92 restaurant workers in Charleston, South Carolina after finding minimum wage and overtime pay violations. Investigators found that the restaurant, 167 Raw, enforced an illegal tip pool by requiring the tipped employees to share tips with management and non-tipped employees. As a result of the illegal tip pool, the restaurant failed to pay the tipped employees the correct wages, in violation of minimum wage laws. The restaurant also failed to pay the employees the correct overtime rates when they exceeded 40 hours in a workweek.
Tip pooling is a common restaurant practice, but is often implemented incorrectly. Tip pools typically collect all or part of the tips received by employees into a pool which is then redistributed among the tipped employees. The restaurant must have a set policy on how the tips are distributed, which employees must participate in the pool, and how much they contribute. Under the FLSA, the federal law says that the employer, managers, and supervisors cannot be a part of the tip pool. Tip pools work towards ensuring that the tipped employees reach the regular minimum wage since they are typically paid an hourly wage below the minimum. The FLSA also requires employers to notify tipped employees of any required tip pool contributions and the policy. Each state has differing notice requirements. DC enacted extensive notice requirements in 2020 through the DC Tip Fairness Law.
MSE proudly enforces the workplace rights of tipped workers, including restaurant servers and bartenders, and has successfully litigated on behalf of hundreds of such workers in the District of Columbia. In June 2019, a federal court approved a settlement agreement with Farmers Restaurant Group in response to a complaint filed by MSE partner Molly Elkin that alleged that the restaurants maintained an unlawful tip pool, and paid the lower tipped wage for substantial non-tipped side work, among other claims.
For more information on the labor and employment rights of tipped workers, please see the “Tipped Workers” section of our “Common Violations” page. If you are a tipped restaurant worker and you believe your rights have been violated, please contact us.
