WASHINGTON, D.C. - An illegal tip pool at a Buda coffee bar led to over $85,000 in recovered back wages for employees.
The recovery comes after an investigation by the U.S. Department of Labor.
What they're saying:
The USDOL's Wage and Hour Division investigated Nate's At the Buda Mill & Grain Inc, operating as Nate's Coffee & Cocktails, in Buda and found it had violated the Fair Labor Standards Act (FLSA).
USDOL says that Nate's was allowing its general manager to participate in an employee tip pool while using the tip credit.
Due to this, Nate's will be required to pay full minimum wage to all affected workers, totaling $85,197 in back wages for 36 employees.
"By law, managers and supervisors are not allowed to retain employees’ tips or participate in a tip pool. Service workers are entitled to all the tips they earn from customers and managers are not permitted to take away those rewards given for employees’ hard work," said Wage and Hour Division District Director Charles Frasier, in Houston. "Employers are encouraged to contact us for any questions about their obligations under the law. We are here to provide assistance."
What you can do:
Workers and employers can call the Wage and Hour Division with questions and requests for compliance assistance at its toll-free helpline, 866-4US-WAGE (487-9243).
How does a "tip credit" work?
Dig deeper:
Under the FLSA, tipped employees are employees that customarily and regularly receive more than $30 a month in tips.
Under federal law, employers are permitted to take a "tip credit" towards their minimum wage and overtime obligations to the employee.
Employers claiming a tip credit must ensure that the employee gets enough in tips from customers and direct wages per workweek to equal at least the minimum wage and overtime compensation required under the FLSA.
Tipped workers must be paid at least $2.13 an hour.
An employer can take an FLSA tip credit equal to the difference between what it pays to the employee and the federal minimum wage, which is currently $7.25 per hour. The maximum tip credit that an employer can currently claim is $5.12 per hour.
However, employers, including managers and supervisors, may not keep any portion of employees’ tips for any purpose. A manager or supervisor may keep only tips they directly receive from a customer for a service they directly and solely provide.
To learn more about how tip credits work, click here.
To learn more about the Fair Labor Standards Act, click here.
The Source: Information in this report comes from the US Department of Labor