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COVID-19 Employment Law: Tips Aren’t Cutting It

COVID-19 Employment Law: Tips Aren’t Cutting It

Best Ohio Wage And Hour Attorney Reply: I’m not making enough money in tips to bring me to minimum wage; does my employer have to pay me more? How much should I be paid as a tipped employee during the Coronavirus (COVID-19) pandemic? What should I do if my employer won’t pay me an hourly wage on top of my tips? COVID-19 Employment Law: Tips Aren’t Cutting It

America has seen a massive halt in most aspects of employment except for those employees that are deemed “essential.” One class of essential employees are the restaurant workers who deliver orders to the public who are quarantined due to the COVID-19 outbreak. A lot of these delivery drivers and employees are typically paid a lower minimum wage than the mandated minimum wage, because the tips they receive from the customers are supposed to compensate them.

Here is the current problem for tipped employees – all dining rooms are closed, meaning that customers are picking up or getting delivery. Most customers are not tipping on pickups and when there is no contact on deliveries with most deliveries being left on the front doorstep, tips are harder to come by.

Our wage and hour attorneys have blogged about employees’ rights to minimum wage under the Fair Labor Standards Act (“FLSA”). The federal minimum wage is $7.25 per hour for non-tipped employees and $2.13 per hour tipped employees as long as the tips actually received would bring the worker’s hourly wage above $7.25 per hour. Moreover, states, like Ohio, can choose to provide a higher minimum wage to employees, and an employee is entitled to the higher of the federal and state minimum wages. Paying employees less than the full minimum wage based on received tips from customers is called a tip credit. Employers can lose the ability to apply the tip credit for a variety of reasons, including managers and owners taking part of the tips; or forcing the employees to share tips with traditionally non-tipped employees. (See Can My Boss Ever Share In A Tip Pool? Best Wage Lawyer!; My Boss Will Not Let Me Keep My Tips! – Call The Right Attorney; and Can I Be Forced To Tip Out Hostesses? – Call The Right Attorney).

More specifically, the U.S. Department of Labor (“DOL”) provides that:

“The employer must provide the following information to a tipped employee before the employer may use the FLSA 3(m) tip credit: (1) the amount of cash wage the employer is paying a tipped employee, which must be at least $2.13 per hour; (2) the additional amount claimed by the employer as a tip credit, which cannot exceed $5.12 (the difference between the minimum required cash wage of $2.13 and the current minimum wage of $7.25); (3) that the tip credit claimed by the employer cannot exceed the amount of tips actually received by the tipped employee; (4) that all tips received by the tipped employee are to be retained by the employee except for a valid tip pooling arrangement limited to employees who customarily and regularly receive tips; and (5) that the tip credit will not apply to any tipped employee unless the employee has been informed of these tip credit provisions.”

In summation, if a tipped employee receiving $2.13 per hour does not make sufficient tips to bring their pay to at least $7.25 per hour, the employer must compensate the employee for the difference. For example, if a tipped worker is making the $2.13 per hour, but is only getting $25 in tips on an eight hour shift, he or she has made $42.04 for the day or $5.25 per hour. This does not equal minimum wage. Under this example, the employer company would have to make up the difference by paying an extra $2 per hour to bring the employee up to the $7.25 minimum wage.

During this pandemic, restaurants, just like most businesses, have seen a decline in their business. Owners and managers are looking for ways to cut corners. Unfortunately, our wage theft lawyers have already seen employers doing this by not paying the tipped employees the shortfall when there are not enough tips to cover the minimum wage.

COVID-19 Employment Law: Tips Aren’t Cutting It

Another wage problem that our wage theft lawyers are seeing is when a boss, manager, supervisor or even the owner is keeping part of a tip pool because he or she “is also working” the job. However, the Department of Labor (“DOL”) reminds us that the law clearly and unequivocally provides that: “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.” The FLSA provides a pretty strict remedy when a boss, manager, supervisor or owner keeps money put into a tip pool – the employer loses the ability to claim a tip credit and must pay the employee the full minimum wage.

Another important aspect of the FLSA is that employees that prevail on claims have their entire attorney bill paid by the employer. While our wage and hour attorneys take every case on a contingency fee basis (you don’t pay a fee unless our lawyers get money for you), this provision means that the payment of attorneys’ fees and costs usually do not have to come out of a recovery by judgement, which means that the employees get to keep much more of the recovery – if not all of it.

The Coronavirus (COVID-19) pandemic makes it difficult for the delivery drivers who rely on tips from their deliveries to pay their bills. Fast Company interviewed a grocery delivery worker named Sarah Elizabeth Kahler about the struggles of delivery service and the struggle to make sufficient tips during this pandemic:

“Every out-of-stock product sets off a negotiation process between delivery workers and customers to discuss substitutions. As the number of items in an order goes down, so does the pay, so workers have a big incentive to find compromises. ‘I’m trying to replace what I can, and so it’s a lot of work texting back and forth with the customer,’ says Kahler. Customers don’t always appreciate how much work is involved, she says. One especially text-heavy order brought in just a $10 tip. ‘Their order was between $300 and $400, so they were tipping way less than even 10 percent,’ Kahler says. That’s one way in which the gig business hasn’t changed. Squeezed by stingier algorithms, delivery workers have come to rely more on generous tips to make up for shortfalls in pay. But that’s proven a hollow promise. Some apps, such as Instacart’s, feature fairly low default tip amounts (just 5%), and customers aren’t aware of or sympathetic to worker’s dependence on gratuities.” – Fast Company

Additionally, employers should consider paying their delivery employees a higher wage. These employees are quite literally risking their lives to bring food, groceries, and other supplies to people who aren’t willing to take the risk themselves. Fast Company also interviewed an “Instacart shopper” (a grocery pickup and delivery service) named Vanessa Bain who was worried about more than just her wages being reduced due to the pandemic:

“There’s another reason, beyond crowded aisles and empty shelves, for all the stress—people’s fear for their safety and that of their loved ones. Bain stopped driving over a week ago due to concerns about catching and spreading the virus, as did her husband, who also works as an Instacart shopper. The couple has a 12-year-old child and also cares for Bain’s grandparents, and they don’t want to risk spreading the infection. ‘It’s dangerous work. It’s work that is done primarily by the people who can afford a medical emergency the least,’ Bain says.” – Fast Company

So, what is the solution? What must employers do to aid delivery drivers in making a livable wage? The answer seems to be clear. If employees plan to keep their tip credit employees, they must compensate them for the difference in their scheduled hourly wage and the federal minimum wage. It is important for employers to be fair to their employees and work together to find the right solution to the issue of short tips. It is also up to individuals who patronize these restaurants to consider tipping generously to fairly compensate tip credit employees for the service they are providing and the risk they are taking.

Are you a waiter, waitress, server, or bartender at restaurant that depends on tips to live? If you are a tipped employee and believe that your employer is not paying you all of your wages for all of your lawfully earned time or taking part of your tips or participating in the tip pool as prohibited under the Federal Fair Labor Standards Act or Ohio Fair Labor Standards Act, contact the attorneys at The Spitz Law Firm today for a free and confidential initial consultation. The wage and hour lawyers at The Spitz Law Firm will provide you with the best options for your overtime pay dispute situation. If you even think that you may be entitled to overtime pay that you are not being paid, it is best to call our top wage lawyers now.

COVID-19 Employment Law: Tips Aren’t Cutting It

Disclaimer:

The materials available at the top of this tipped wage violation, wage and hour web page and at this employment law website are for informational purposes only and not for the purpose of providing legal advice. If you are still asking, “Can my boss take my tips?”, “Does my job have to pay me if I don’t get enough tips from customers”, “I’m not being paid minimum wage” or “What do I do if my job is stealing my pay”, the your best option is to contact an Ohio wage attorney to obtain advice with respect to FLSA questions or any particular employment law issue. Use and access to this employment law website or any of the links contained within the site do not create an attorney-client relationship. The legal opinions expressed at the top of this page or through this site are the opinions of the individual lawyer and may not reflect the opinions of The Spitz Law Firm, Brian Spitz, or any individual attorney.

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