Unfair Tip Pool Deductions?  How to Sue an Employer for Lost Tips in 2023

Under the Fair Labor Standards Act, tips are should be the property of the employees who earn them. However, sometimes wait staff, bus staff, and other employees who may receive part of a tip pool do not receive their fair share of tips. This type of scenario has resulted in many lawsuits over the years.

In a bustling restaurant, tipped employees are used to working hard as a team, especially when the tickets are flying and sometimes the dishes as well. Team spirit may break down when managers or other tipped workers abuse tip pools to deny wait staff or bus staff their rightful wages. In some “tips pooling” systems, managers have been known to redistribute tips so that managerial or kitchen staff take tips from those who earn them by working the customers’ tables.

The problem is that when supervisors are taking from the tip pool, tips are not going to the workers for whom the tips are intended. On rare occasions, some supervisors may personally wait tables or clean up dishes and napkins. But usually, supervisors perform distinct duties that separate them from the tipped employee workforce, and their managerial roles make them ineligible to share in tip pools.

Under both federal and New York law, tips are for workers, not managers or owners. A managerial employee who exercises authority or control over the tipped employees should not be taking from a tips pool.

Tipping helps employers avoid paying the full cash minimum wage – $15 per hour or more in New York City, Long Island, and some other areas. But the basis of tipping is that workers personally engaging with the customer or their table or vehicle gets tips. The owner and supervisory staff do not get to take from the tip pool. They violate the law when they do not pay minimum wage in either cash or cash plus tips.

Also important is the fact that if tip pools are not shared among the service staff properly, an owner may violate applicable laws by not paying staff the minimum wage or applicable overtime pay rate. Employers are supposed to keep track of and make sure that tipped employees earn a tip credit that is at least the minimum wage and applicable overtime rate once added to the cash wage paid, unless they are exempt from the wage laws.

It’s important for a tipped employee to keep track of what an employer tells them about the tip pools where they work and whether what is said matches up with how the pool is managed every night. Keeping copies of agreements or writing down what owners or managers say can help your lawyer challenge any deductions made in violation of the law or without proper communication.

The professional advice from an attorney specializing in employment law and in class actions can be vital. They can talk with you about your experiences, assess your specific situation in terms of paychecks and tips, and help you join a lawsuit if necessary, after unlawful deductions are taken from the tip pool.

A wage and hour class action typically has the benefits of making lawsuits that might not be worth enough to file individually into a powerful tool for obtaining compensation for all affected employees. The initial employees who join the action may even be entitled to incentive payments for providing evidence to the court.

If you have suffered wrongful tip deductions or are missing tips, been told to work off the clock, or have been misclassified as to your minimum wage, you may benefit from a free consultation to make sure you are being fully and correctly compensated for the hours you work.