Atlanta Employment Attorneys Blog
Restaurant work is often fast-paced and can be hectic. Providing quality service to customers requires a high degree of teamwork and can demand that workers wear many “hats.” This may potentially create some gray areas when it comes to tip pools. If you have questions about who should — and should not — participate in a tip pool, you should consult with a knowledgeable Atlanta wage and hour lawyer.
One example of this comes from a letter to the Wage and Hour Division (WHD) from earlier this year. In the scenario, the business was a “quick service restaurant.” At the restaurant, employees worked on a line preparing and assembling the food the customers picked out, then the customers paid for their food at the end of the line before finding a table in the dining area. (Fast-casual Mexican establishments like Chipotle and Qdoba are examples of a similar type of quick service restaurant.)
At the restaurant, all team members received a cash wage at or above the applicable minimum wage. The restaurant nevertheless allowed customers the option to leave a tip, either on their credit cards or in a tip jar. The restaurant subsequently pooled the tips and split the pool among its employees.
The employer’s question revolved around managerial employees (who held job titles of Assistant Team Leader and Team Leader) who periodically staffed the restaurant’s service line due to short staffing, and whether they could share in the pooled tips.
As the WHD explained, the FLSA contains an express prohibition barring managers and supervisors from retaining any portion of employees’ tips, and that prohibition applies regardless of whether the employer avails itself of the tip credit.
The key to determining whether an employer should (or should not) share pooled tips with a particular worker (or group of workers) is not what duties they performed on a given shift, but instead how they were classified under the “employee duties test” in the federal regulations, which looks at an employee’s primary duties over a more extended amount of time.
Criteria for Qualifying as a Manager/Supervisor
That test lays out several criteria for qualifying as a manager or supervisor. The criteria says that:
1) an employee must “customarily and regularly” direct the work of at least two or more other full-time employees or their equivalent;
2) the employee must have the authority to hire or fire other employees, or make hiring/firing suggestions or recommendations that carry weight with the employer;
3) the employee must have a primary duty of “managing the enterprise or a customarily recognized department or subdivision of the enterprise.”
Assuming that the restaurant’s Team Leaders and Assistant Team Leaders met the Code of Federal Regulations’ test for managers/supervisors, those employees could not share in the tipped pools. As the WHD explained in its reply to the restaurant, “whether an employee is a manager or supervisor under the Department’s regulations… does not vary from shift to shift, since… the primary duty of an employee is determined on at least a workweek basis.” The WHD also reiterated that to “permit an individual whose primary duty (based on their job as a whole) is management to receive tips from a tip pool because the individual works a shift in a non-managerial capacity would circumvent the statutory prohibition against allowing managers or supervisors to keep any portion of other employees’ tips.”
The same was true in reverse for the restaurant’s shift leads. Assuming they did not meet the test for managers/supervisors, they were entitled to share in the pooled tips, even if they engaged in some managerial work, so long as their primary duty was not managerial/supervisory.
As this example illustrates, wage-and-hour questions can seem murky to the untrained eye. If you have questions about tip pools or other matters involving tipped employees, Parks, Chesin & Walbert’s team of Atlanta wage-and-hour attorneys can help. Contact us through this website or at 404-873-8048 to schedule a consultation today and get the reliable answers you need to your questions about tipped employees.