National Restaurant Association (NRA)Challenges Tip Rules

By Leeds Brown Law | March 18, 2017

National Restaurant Association Asks Court to Review Rules About Pooling Tips

In 2011, the US Department of Labor (DOL) amended the Fair Labor Standards Act (FLSA) to explicitly prohibit the practice of permitting front-of-house workers to share gratuities with back-of-house employees. According to Eater, the National Restaurant Association (NRA) has asked the US Supreme Court to hear a case to decide “if employee tips may be collected by the employer and redistributed among tipped and/or non-tipped employees.” In its court petition, the NRA states that it wants restaurant owners to have the option of having tipped and non-tipped workers share and also calls into question the DOL’s authority to amend the language of the FLSA.

Under the “old” rule, tip sharing was allowed among all employees earning the minimum wage, regardless of their duties. The NRA would like to see this rule reinstated and claims “Congress did not grant a specific statute under which the Department of Labor can make such rules or amendments to the law.”

The FLSA states “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.” It further advises, “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.”

What Are the Positions on Tip-Pooling?

Opponents to sharing tips with non-tipped workers worry that there will be an erosion of the notion that tips belong to employees and have concerns that employers will use any means to use tips to keep their operating expenses down.

The NRA argues that their only intention is to open the possibility for establishments to have the opportunity to reward back of house employees for their hard work. It is “purely about restaurants being able to have tip pools that also include kitchen staff.”

What will Happen to Your Tips?

Tip-sharing laws may or may not be changing within the DOL or the courts, but restaurants have tried to revise the rules in their own establishments. Danny Meyer, the NYC-based restaurateur, famously declared a few years ago that he was raising wages in for his staffers and eliminating tipping from his places of business. He provides compensation to employees working in the front and back-of-house based on merit, not what he calls “arbitrary generosity of individual guests,” and has raised his menu prices to accommodate higher salary expenses. Meyer explained in a recent interview that while the earnings of tipped workers have increased 300 % in the last 31 years, kitchen workers’ earnings have increased about 20%. This wage disparity was part of his motivation to move away from customary tipping. A few years ago, California-based Chef Zach Pollack began adding a kitchen tip line to his customers’ checks, allowing those who wanted to reward the hard working chef, line cooks, and dishwashers, the opportunity to do so.

The Supreme Court has not heard any new cases about tipping. Currently, the rules remain the same. Tipped workers may not share tips with non-tipped employees. A tip-pool is valid only when it includes regularly tipped employees. If your employer has asked you to share your tips with the back-of-house workers, you may be able to recover your earnings. Make sure your business is applying your tip credit the right way, paying you minimum wage and overtime as the law demands. If you have any questions about your wages, contact Leeds Brown Law, P.C.

Contact Us

Leeds Brown employment lawyers, helping New Yorkers recover unpaid wages, tips, and overtime pay can help if your employer is withholding gratuities or other payments. We can help you collect the money you are owed and otherwise enforce your rights. You can reach us 24/7 at 1-800-585-4658 so call today and see if we can assist you to pursue an unpaid wage or tip theft claim.



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