Although the federal Fair Labor Standards Act (FLSA) requires employers to pay their workers a minimum hourly wage, employees who earn tips can legally be paid a much lower minimum wage. This is because the law assumes the employees are making up the extra wages in tips, but when that’s not the case, the employer is required to make up the difference.
According to a recent wage and hour class action lawsuit, Logan’s Roadhouse Inc. allegedly underpaid its servers by requiring them to work off the clock, perform too much side work, declare tips they did not receive, and transferred tips to subsequent weeks to satisfy tip requirements.
Side work is often included as part of a server’s job responsibilities. It consists of work for which the servers do not receive tips, including opening and closing duties, cleaning, stocking supplies, etc. Under the relevant labor law, tipped employees can spend no more than 20% of their time performing side work. Any more than that, and they are entitled to be paid the full minimum wage.
Declaring the amount a server earned in tips is also standard practice to provide proof that the server was paid at least the full minimum wage through the combination of wages and tips. However, declaring tips that a server was never actually paid is illegal. Continue reading