Restaurant Server Wage and Hour Attorneys
Does a Restaurant Server Have to be Paid Minimum Wage and/or Overtime?
Here are some modified snippets from a recent case, which shows what a waiter/waitress might encounter:
The defendants ran an eatery in Manhattan, New York (wage and hour laws govern the entire United States, not just Utah). The plaintiff worked as their waitress. Keep in mind that it’s typical in the restaurant business for owners to get in over their heads because they have so many things to do, and often restaurants are opened by nice people, who want to hang out together, and serve their friends food.
In other words, sometimes an owner may – at least subconsciously – see his or her restaurant as a “Cheers,” and feel that the staff is their “family”, and “everybody will just get along.” In other words, they are placing way too much trust in their fellow humans. Chain restaurants (like McDonalds or the Olive Garden) know better, and they usually have a much higher level of compliance. Unfortunately for small restaurateurs, the United States Fair Labor Standards Act can be a bit hard to understand, and if they don’t have competent legal counsel they can easily run afoul of the law.
The case we are referring to is somewhat typical (Bittencourt v. Ferrara Bakery & Cafe Inc. 2015): The plaintiff claimed defendants failed to pay her the required minimum wage. “Prior to 2012, the defendants failed to pay her an hourly wage and, after April 2012, the defendants paid her an hourly wage of $5.00. . . . Further, the plaintiff alleged that the defendants did not inform her of the tip credit and did not keep track of tips.” This is an easy pit for restaurateurs to fall into, and they really ought to have software that tracks this for them. And, in defense of them, servers are not always honest about how much they get paid in tips.
Things can get ugly really quickly in cases like this for an employer because once one domino falls, many others usually tumble, too. So, you’d think a typical employer would settle quickly, but they often dig in (and frankly, many employers will try to defend themselves by accusing the employee of theft, which can be viewed as “retaliation” under the FLSA). Even worse, sometimes the employer’s legal counsel can be unaware of the law, which may cause him to do nothing other than help his client dig his own grave. (In other words, unnecessarily run up his client’s attorney fees, and get his client sued for retaliation, too.)
Thus, plaintiffs have to be careful with their cases because they can bankrupt a small business fairly easily, leaving the business nothing to pay the plaintiff. So, it’s not a bad idea for Plaintiff’s to fly under the radar by not blabbing all about their case to their fellow employees. In other words, an employee may want to be careful he or she does not trigger a “class action lawsuit.”
Here is the law according to the United States Department of Labor (dol.gov) from the Wage and Hour Division (WHD), (Revised July 2009) (PDF). Taken from Fact Sheet #2: Restaurants and Fast Food Establishments Under the Fair Labor Standards Act (FLSA)
According to the DOL the restaurant/fast food industry consists of businesses that primarily deal in the “selling and serving to purchasers prepared food and beverages for consumption on or off the premises.”
Some employers mistakenly think they don’t have to pay minimum wage to their servers because “restaurants/fast food businesses that have annual gross sales from one or more establishments that total at least $500,000 are subject to the FLSA.” It is a huge blunder for an employer to read that and stop there.
The reason an employer must keep reading is the law also says that “any person who works on or otherwise handles goods that are moving in interstate commerce is individually subject to the minimum wage and overtime protection of the FLSA.
In other words, according to the DOL, “a waitress or cashier who handles a credit card transaction would likely be subject to the Act.”
So, even though an employer is not “covered,” the employee is! So, the employer must still pay him or her minimum wage.
Minimum wage: Covered non-exempt workers are entitled to a federal minimum wage of not less than $7.25 per hour effective July 24, 2009. The employer should assume the servers are “nonexempt.” Wages are due on the regular payday for the pay period covered.
Got that? So, if an employer doesn’t pay the employee on time, the employee may sue. So, if there is ever an issue with minimum wage, the employer would be wise to fix it immediately – otherwise, the employer could have to pay it double, plus attorney fees!
Also, an employer cannot deduct money from your wages for items such as “cash shortages, required uniforms, or customer walk-outs” if the deduction causes your wages to fall below the minimum wage or cuts into your overtime pay. And keep in mind that employers are on very thin ice when they dock your pay for any reason because the employee can allege theft, and sue the employer for three times the damage.
The DOL also states that “deductions made for items other than board, lodging, or other recognized facilities normally cannot be made in an overtime workweek.” And servers need to know that tips can be considered part of the server’s wages, but the employer must pay not less than $2.13 an hour in direct wages, and he must also make darned sure that the amount of tips that the server receives is enough to meet the balance of the minimum wage.
The DOL says that the employer may take credit for food “which is provided at cost.” Now, just what is cost can be an entire can of worms. “This typically is an hourly deduction from an employee’s pay. However, the employer cannot take credit for discounts given employees on food (menu) prices.”
The law says that “tipped employees are those who customarily and regularly receive more than $30 a month in tips.” If an employer is going to use the tip credit, the employees must be informed in advance of “the amount of tip credit to be claimed, and the employer must be able to show that employees receive at least the applicable minimum wage when wages and tips are combined.” Also, “employees must retain all of their tips, except to the extent that they participate in a valid tip pooling or sharing arrangement.”
Got that? The employer cannot steal from you!
For servers, the overtime law can be a big issue.
The FLSA states that “overtime must be paid at a rate of at least one and one-half times the employee’s regular rate of pay for each hour worked in excess of 40 hours per week.” So, naturally, the Christmas season needs to be carefully monitored by the employer. The DOL makes it clear that “tipped employees who receive $2.13 per hour in direct wages are also subject to overtime at one and one-half times the applicable minimum wage, not one and one-half times $2.13.” (About $10.88)
According to the DOL if employee uniforms are required by the employer, the actual cost of the uniform is considered to be a business expense of the employer. The employer can under certain conditions require the employee to bear the cost of the uniform, but “if the employer requires the employee to bear the cost, such cost may not reduce the employee’s wages below the minimum wage or cut into overtime compensation.”
Exemptions from Overtime:
There are some exemptions to all of this under section 13(a)(1) of the FLSA, which gives exemptions from the Fair Labor Standard Act’s requirements for employees that work in “a bona fide executive, administrative or professional capacity or as an outside salesperson.”
But keep in mind that an employee will normally only qualify for exemption if “all pertinent tests relating to duties, responsibilities and salary, as set forth in Regulations, 29 CFR Part 541, are met. The salary and duties tests for the exemptions are fully described in Regulations Part 541.”