Thomas McCutcheon

When I was growing up one of my dad’s good friends owned a restaurant. That meant that I had a job working in that restaurant. I cooked and I cleaned. I waited on customers and rang up orders. Working in a restaurant is hard work.

Workers in service industries who are tipped as part of their compensation are still entitled to minimum wage. The Fair Labor Standards Act mandates minimum wage as a minimum legal payment amount for workers in America. Employers for years have tried to find ways around paying employees minimum wage. A good example is taking a person who has no real authority and calling them an assistant manager, putting them on salary and requiring them to work far more than 40 hours a week.

Many, if not most restaurants, pay wait staff $2.35 an hour plus tips as long as the combination of the hourly rate and the tips adds up to at least minimum wage. Most restaurants require wait staff to perform duties that do not result in a tip, thus paying these workers $2.35 for cleaning duties. For example, if a person who waits tables is required to prepare food for several hours and then allowed to work enough tip work to average minimum wage, that was considered to be legal. A recent federal decision against Denny’s modifies that practice substantially.

If the employer requires a server to spend an hour performing sidework after taking their last table of guests, but before the employee can clock out and go home, it may be reasonable in an eight-hour shift where the employee had seven hours to perform tip generating work. However, it would be less reasonable in a three-hour shift where the employee only has two hours to earn tips.

Denny’s had their employees preparing food such as cutting fruit, preparing pancakes and french toast, as well as filling delivery orders for Uber Eats and Grub Hub when tips from those orders always went to the driver. Denny’s would have their wait staff act as hosts or perform extensive cleaning before they could clock out.

The Federal Court ruled that Denny’s should have had their servers clock in under full minimum wage jobs after waiting on the last guest and did not do so and instead captured the cost savings of the tip credit. The Court ruled that a ratio of 80% tip work to 20% non-tip work was reasonable.

The Wage and Hour Department enforces the Fair Standards Labor Act. Joel and I handle these cases.

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