Attorneys James T. Carey and P. Zachary Stewart

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How do tips factor into your pay?

On Behalf of | Dec 28, 2021 | Overtime And Wage Issues

Unfortunately, the categorization of wages and classification of employees does not always help to streamline a workplace experience. Sometimes, employers will use these complex systems to pay improper wages or get away with wage theft.

But how do you know if you have suffered from such a thing? First, you need to know how other forms of payment outside of your paycheck factor into the total amount that you make.

Dealing with a tip pool

HR Dive discusses a recent case in which tipping at a restaurant starred as the primary focal point. Employees stood up against a decision to put all tips into a tip pool that also included the employees who do not receive tips, such as chefs, cooks and other back-of-the-house employees. Employers sometimes use this tactic as a way to avoid paying employees minimum wage.

In this particular case, the court sided with the employees on several points. First, compensation that servers make through tips brings their total wages to what roughly serves as the average minimum wage. Next, when non-tipped employees shared in the tip pool, it caused the wages to drop below this minimum. They state that these tips should not count toward the mandated pay requirements of the servers for that reason.

Handling automatic gratuities

Automatic gratuities, which restaurants often have in place when serving large groups, do not count as tips. Thus, employers should not include them when calculating the wages of their employees. Finally, unless the automatic gratuity makes up 50 percent of the employee’s pay, it also does not count as a commission.

It is important to seek the appropriate pay when an employer tries to shortchange you, especially through underhanded means such as this.