Who’s Your Daddy? Updated
FAIR LABOR STANDARDS ACT. FACT SHEET #15 This is what governs tip regulations. Lawyers are your best bet for enforcing it.
Some information about the Fair Labor Standards Act
More than 100 million full and part time workers are covered under the Fair Labor Standards Act, which sets criteria for minimum wage, overtime pay, record keeping and child labor. The law generally applies to businesses that generate ore than $500,000 a year. However, if tipped employees swipe a credit card then they are covered under the FLSA as well. The Dept of Labor considers credit card transactions as interstate commerce. If an employee engages in interstate commerce, that employee is subject to the FLSA
When you attended elementary school and had recess you probably encountered an adult supervising or performing “yard duty” This adult was usually responsible for making sure the class bully didn’t start a fight and that kids didn’t steal from each other. In the labor market, which is the playground, various government agencies such as The Department of Labor or Wage are supposed to take on the role of “Yard Duty”. Their main job is to make sure workers are protected and businesses play by the rules.
But Before these Labor “Yard Duty teachers” were around workers had none one to turn to. They had no choice but to create unions. Some of these unions were like the mob. You paid a part of your salary for protection.
The trade off was worth it for many workers. With a Union, they often enjoyed fair wages, sick and vacation pay, better working conditions and even retirement. The restaurant industry saw a surge in Unions, especially during the 1950, creating powerful unions known still today as HERE. But business owners soon armed themselves with union busters and lobbied for laws against them.
Today the restaurant industry has been successfully pruned of most unions. Although a small pocket of union activity still remains, the majority of restaurant workers do not belong to a union. Government agencies are now in charge of “Yard Duty”
WHOSE IN CHARGE THE STATE OR THE FEDS?
When states do not make their own laws, then federal law applies. For example, most of the southern states do not have minimum wage laws; therefore servers automatically fall under the federal sub -minimum wage of $2.13 per hour. Another example would be employers deducting credit card processing fees from a servers credit card tips. While some states have written clear wage orders that prohibit this practice, others have not. 35 states, including D.C have simply implemented the FLSA (Fair Labor Standards Act) with respect to tipped wages. But some states have created and written their own laws that do not clearly deal with the question.
If a state has a higher sub-minimum wage such as $3.40 per hr. this wage will supercede the federal wage. HOWEVER, Please note* Only the Feds will enforce the FLSA Fair labor standards act. Which means if the employer violates the tip credit and the server attempts to recover the full minimum wage, only the Federal minimum wage will apply. States do not automatically enforce the FLSA, only state laws.
Casinos that operate on Indian land are subject to Federal wage laws. Although sometimes these casinos and resorts can offer higher wages for servers, it is only the federal wage and hour laws that can be enforced.
Wage Violations. Who do you turn to?
STATE WAGE AND HOUR
for employers with less than 20 employees or who does not use credit cards. When you do not need to enforce the FLSA. Enforces state laws only.
FEDERAL WAGE AND HOUR
When you want to enforce the tip credit criteria. When your employer uses a credit card. When you want to recover lost wages under the FLSA provisions. The FLSA allows for reimbursement of the full min wage if employer does not meet criteria for tip credit. (State law does not recover the difference in full and sub min wage)
CITY ATTORNEY
When you want to enforce the local city minimum wage ordinance. For example, in Santa fe the minimum wage is $9.85. Under its provisions tipped employees must make a minimum wage of $9.85 with $2.13 +tips combined. (However, this law does not have teeth). Attempts to contact the Attorney for enforcement were ignored.
HIRED ATTORNEY
You can hire an attorney to enforce the FLSA. They are much more efficient than the Federal Agency and may allow you to pay them out of the settlement you are awarded.
Build your Case:
When preparing to file a wage claim you should do the following:
- Keep a daily record of tips including the FULL names of people you tipped out.
- Gather evidence. keep a copy of any check you were forced to pay-due to walk out or mistake. keep receipts of payouts, end of the day reports, anything in writing that shows illegal deductions
- Bring your camera. Take pictures of any illegal deductions recorded on paper. Also, take pictures of any outdated Dept of Labor wage posters that are displayed in the work area.
- Get both verbal and written statements from other employees. Have another tipped employee who witnessed the illegal practices, agree to sign a statement that you both notarize.
- Keep a daily log. Summarize events by dates. For example, On June 10th, a customer walked out and I was forced to pay the entire bill of $150.00
- Research- Try to find out if Employer has a ‘Record” of wage violations.
- File in numbers. The more employees who step forward, the better chances are for recovering wages. If illegal activity has a long history and involves a substantial number of employees, strongly consider hiring a lawyer.
The Federal Wage and Hour agency enforces the Fair Labor Standards act, not the state. The state will only enforce state laws. (There may be exceptions-check with state labor boards) If you file with the state, then Federal Wage & Hour may refuse to take on your case. Lawyers can also be hired to enforce the FLSA
In a New York times article, (May 12,2007) several restaurant workers said they turned to lawyers rather than the federal or state labor departments because government officials often respond more slowly. Also, in New York, the Labor Department usually seeks just two years of back wages to be paid to employees whose cases it presses, while lawyers often file claims covering six years of back pay.
State agent’s opinions should be backed with a second opinion. Sometimes the state will tell workers they have no case when clearly they do. Many times while conducting research for my blog, I received conflicting information. Extracting public support and information will require patience, determination and asserting your right to speak with a supervisor.
City Laws? Whose your Daddy?
In Santa Fe the minimum wage is $9.85 per hr. Tipped employees who receive more than $100 or more must earn at least $9.85 with the tip credit. This means the employer can still pay $2.12 an hr but the tipped employee must make the difference in tips. While this is a law that looks good on paper and probably makes some politician look good, it has no teeth.
City laws can sometimes lack the funds to be enforced. The city attorney may not have the resources to enforce these local laws or any knowledge of the tip credit. I found the Santa Fe minimum wage only applies to non-tipped workers.
State Laws? Go to the State wage and hour if your state has its own sub-minimum wage laws. Some states may be willing to enforce FLSA but most will not.
The State will be faster than Federal Agents, but the process may be awkward. Be prepared to encounter state workers who have never heard of the tip credit before. They are just as confused as everybody else. In New Mexico, I had to comb through a staff of workers until I finally met a supervisor who truly understood the tip credit. Please note: If you turn to a state agency to recover wages, the feds will not also take on your case. You have to make a choice state or the feds. I was told by federal agents that I would not recover the the full min wage because I already was made whole by the state. The state did not make me whole or enforce the FLSA, but since I recovered some of my wages with the state, the feds refused to recover the additional monies I was entitled under the FLSA
Who else is your Daddy?
The IRS (The Internal Revenue Department. )
Tips are considered income and are subject to full taxation. The IRS provides forms for you to legally document your tips, correct W2 forms and help you challenge employers who overreport the amount of tips you may have earned. They can also help you with fraudelent tax information. If your employer claims for example that a certain percentage of your tips is being deducted for bussers or hostesses but indeed does not. Then you can report this practice to the IRS.
Unemployment Office
Yes, you can file for unemployment. If you can prove that you quit for good cause, such as illegal deductions from your earnings then you may be able to recover wages for the time spent looking for work. You must prove in most cases that you went through a chain of command and that you raised your concerns over the illegal deductions with management and /or owners.