Last night Gordon Ramsay’s Kitchen Nightmares ended its season with a visit to the Arizona restaurant Amy’s Baking Company. For the first time, he walked away from the restaurant without making any changes or improvements to the restaurant. (The owners seemed to also think this was for the best.) The restaurant suffered criticism online pointed at the restaurant’s treatment of the staff, particularly how the waitstaff was paid. According to the footage aired, the restaurant pays waitstaff an hourly rate but the owners retains all tips. Hopefully employment conditions at the restaurant are not the way the footage made it appear.
In fairness, before continuing, the restaurant released this statement on facebook:
[blockquote] “We do not, nor have we ever stolen or taken any of our servers, waitresses, or waiters tips at Amy’s Baking Company.
We pay our staff members anywhere between $8.00 to $14.00 per hour to ensure that at the end of the week regardless of it being busy or not, that they go home with money and a well paid paycheck. As do many other restaurants.
They are aware of this when they are hired. I would challenge any of our employees past or present to come forward with proof that we have ever done such a horrible thing.”[/blockquote]
I have no idea what tips employees received or that the owners actually kept any tips. I’m not attacking the restaurant or Kitchen Nightmares. Instead, it is an excellent opportunity to discuss several issues affecting tipped employees. So let’s break down how each issue as though it arose under Texas law.
Definition of Tipped Employees
Tipped employees are those who receive a substantial portion of their income from customer tips. This commonly includes waitstaff, bartenders, and other front-of-house positions. Unlike non-tipped employees, tipped employees often earn a base wage that is lower than the standard minimum wage, with the expectation that tips will supplement their earnings.
Minimum Wage for Tipped Employees
One of the most crucial aspects of being a tipped employee is understanding the minimum wage laws that apply to them. The Fair Labor Standards Act (FLSA) in the United States allows employers to pay a lower base wage to tipped employees, known as the tipped minimum wage, as long as the tips received by the employee bring their total earnings up to at least the standard minimum wage. However, if tips fall short, the employer is responsible for making up the difference.
Tipping Culture in Restaurants
The tipping culture varies across different countries and even within regions. In some countries, tipping is expected and considered a social norm, while in others, it may be less common or even frowned upon. In the United States, tipping is deeply ingrained in the restaurant industry, with customary tip percentages ranging from 15% to 20% of the total bill.
Pros and Cons of Being a Tipped Employee
Being a tipped employee comes with both advantages and disadvantages. On the positive side, tips can provide the opportunity for higher earnings, especially in establishments with generous tippers. Additionally, the direct correlation between service quality and tips can incentivize exceptional customer service. However, there are also challenges, such as the unpredictability of income and dependence on customer generosity.
Legal Rights and Protections for Tipped Employees
Tipped employees have legal rights and protections to ensure fair treatment in the workplace. These rights include receiving minimum wage, protection against tip theft by employers, and the right to retain all tips received. It’s important for tipped employees to be aware of their rights and take appropriate action if they suspect any violations.
Issues Surrounding Tip Pooling
Tip pooling, where tips are collected and distributed among a group of employees, can be a contentious issue. While tip pooling can promote teamwork and ensure fair distribution, there have been cases where employers have abused this practice. Understanding the legal regulations and maintaining transparency is crucial to avoid potential conflicts.
Can waiters, waitresses and other front of house employees receive pay on an hourly rate?
Absolutely. Waitstaff earn the federal minimum wage for each hour worked. Employers can take a tip credit out of the minimum wage for tipped employees. The employer only has to pay $2.13 an hour of the $7.25 minimum wage. However, if employees do not earn minimum wage between the hourly $2.13 and tips the employer makes up the difference. An employer does not have to take the tip credit. The employer could pay the full $7.25 or more per hour and still let the employee keep her tips.
Can the employer choose between an employee receiving tips or an hourly rate?
No. An employee must make at least the minimum wage (except a few rare exceptions) whether it all comes from the employer’s pocket or a combination of employer and customer. The employer can set the employee’s wage rate higher than minimum wage but it can never take tips away from an employee.
If the employer does not take the tip credit can it take tips from the employee?
No, the employer may never share in tip pools or directly take tips from an employer. Same goes for members of management and back of house employees.
If the owners or managers help serve the front of house, can they take part of the tips?
They cannot take tips away from other employees, so they cannot participate in tip pools or require employees to tip out to managers, owners, or the business itself.
If the owner or manager processes the transactions can they take the tips?
This is part of the issue in the restaurant featured in Kitchen Nightmares. One of the owners processed all point of sale transactions so he allegedly took all the tips. I had the impression that is why the owners do not believe they have taken tips from the pockets of their employees. (That may be an incorrect impression). The standard for who earns a tip is not who processes the financial transaction, rather it is a question of who provided service to the customers. So even if a waiter or waitress does not process their own transactions, he or she still earns tips left by each of their customers.
What about mandatory service charges for large parties?
Those service charges are the property of the employer and the employer can choose to pay those to the employees or keep them. The reason why is, at least in Texas, the business assess service charges and are exclusive of gratuity. That is why a separate gratuity line shows up on credit card receipts for large parties. That gratuity paid on the ticket belongs to the tipped employees not the employer.
Get help with an unpaid wage, tip pooling, or overtime pay issue in Fort Worth and Dallas, Texas
If you are a tipped employee and believe your tips are being improperly withheld by your employer you should contact an employment lawyer to discuss your concerns. Looking for more information about unpaid wage issues in Texas? Visit the unpaid wage and overtime pay page.