In my labor and employment practice, one big red flag for me is that a restaurant or bar is violating the Fair Labor Standards Act (FLSA) is requiring their wait staff or bartenders to pay for uniforms. It could be an apron, a shirt, or a pair of tights.
Why requiring waiters and bartenders to pay for uniform is illegal.
Whether they are called waiters, waitresses, bartenders, or Hooters Girls, tipped employees are workers who are paid less than minimum wage. The minimum wage is $7.25 an hour. The Fair Labor Standards Act (FLSA) requires all restaurants and bars to pay employees a minimum wage, which is currently $7.25 per hour. See 29 U.S.C. § 206(a)(1). This sounds familiar, right?
What is a Tip Credit and why does it matter?
The FLSA contains an exception that permits restaurants and bars to pay waitstaff and bartender less than the general minimum wage of at least $2.13 per hour -to a ‘tipped employee’ as long as the employee’s tips make up the difference between the $2.13 minimum wage and the general minimum wage.” One of my restaurant cases that went on to the Federal Court of Appeal made this point very clear. Montano v. Montrose Rest. Assocs., Inc., 800 F.3d 186, 188 (5th Cir. 2015) (citing 29 U.S.C. § 203(m)).
This is called a “tip credit, ” this is a narrow exception to the minimum wage and is a privilege for employers. If an employer gets sued for minimum wage violation, it is their burden of proof to establish that (1) they informed the tipped employees of the provisions contained in § 203(m); and (2) the tipped employees retain all of their tips.
Requirement number (1) is hard for many employers because they don’t even know what section 203(m) of the FLSA says. How are they going to notify their workers if they don’t even know the letters of the law?
The second requirement is really easy. Don’t take tips from your waiters and bartenders. An employer may not keep tips received by its employees for any purposes, ” Section 203
Why this matters is if the restaurant or bar violates the tip credit, the FLSA requires that they go back and pay every bartender, waiter, waitress, or waitstaff, $5.12 an hour for every hour they worked in the last 2 to 3 years.
Hands off the tips
Requiring a tipped employee like a waiter or bartender to purchase a uniform is an absolute no-no. A typical scenario is that the waiter or waitress gets their uniform dirty in the middle of a shift. Maybe they spilled food on themselves or were required to spray off some plates and got splatters. Rather than send the worker home, some restaurants or bars may require the worker to buy a fresh change of uniform. This is a FLSA violation. The reason is that the bartender or waitress would have to use their own money, presumably cash tips, to pay for the uniform.
Remember, if a restaurant or bar can’t deduct tips for uniforms, they can’t give tip money to managers either.
Don’t bankroll your operation or kitchen staff with tip money
The FLSA does not prohibit the pooling of tips among employees who customarily and regularly receive tips.” 29 U.S.C. § 203(m)(2)(A)-(B). This means people who work in the “front of the house” serving customers and not the kitchen workers. Tip pooling is not allowed, and the tip credit cannot be claimed, if “an employee is required to share tips with an employee who does not customarily and regularly receive tips.” Montano, 800 F.3d at 189. My Montano case was a lawsuit against Tony’s Restaurant in Houston. It was one of those fancy restaurants that had a person who worked exclusively in the kitchen making coffee. The restaurant required the waiters to tip out to the coffee man in the kitchen. You can’t do this because kitchen workers do not interact with the customers and are not typically tipped. When was the last time you dined at a restaurant or a bar and were so impressed with the fries that you added tips for the fry cook? Never right? That’s the whole point of the FLSA that says restaurants can’t use tips earned by waiters or bartenders to pay wages for the kitchen workers.
TIP POOL LAWSUITS WE HAVE FILED AGAINST RESTAURANTS
Illegal tip pools and tip deductions are among the most common wage violations I see in restaurants and bars, and my firm has sued restaurants over them. The pattern is usually the same. The restaurant pays servers and bartenders the $2.13 tipped wage, then requires them to hand over tips to employees who do not customarily and regularly receive tips, such as kitchen staff, managers, or the owner, or takes tips back to cover the restaurant’s own losses. When that happens, the restaurant loses the tip credit. It must then make up the difference between $2.13 and the $7.25 minimum wage, which is $5.12 for every hour worked, and it can owe an equal amount in liquidated damages on top. See 29 U.S.C. §§ 203(m), 216(b). Here are cases we have filed. These are allegations in public court filings unless a court has ruled, and I note below where one has.
Montano v. Montrose Restaurant Associates, Inc., 800 F.3d 186 (5th Cir. 2015)
Two waiters at Tony’s, a Houston fine-dining restaurant, sued because the restaurant required them to share tips with a “coffeeman” who worked in the kitchen with little or no contact with customers. The trial court sided with the restaurant. We appealed, and the Fifth Circuit reversed. The court held that the restaurant has the burden of proving its tip pool is legal, and that a jury could find the coffeeman did not customarily and regularly receive tips. If he did not, the restaurant violated the FLSA and owed the waiters the full minimum wage.
Austin v. The Creek Group Company, No. 4:20-cv-03363 (S.D. Tex.)
We sued the company behind Cactus Cove Bar & Patio and Onion Creek Coffeehouse Bar & Lounge in Houston, and its owner, for a bartender and waitress and the other servers and bartenders. The complaint alleged that servers were paid $2.13 an hour but had to share tips in a pool that included the restaurant and its managers, had to tip out kitchen staff $25 each at big events while the company kept additional tips, and had to use their tips to pay for aprons, order voids, cash drawer shortages, and credit card chargebacks. On January 18, 2023, the court granted our motion for partial summary judgment and ruled the restaurant could not use the tip credit defense because it could not prove it gave the servers the notice the law requires.
Edwards v. Coaches Sports Bar & Grill Humble, LLC, No. 4:15-cv-01811 (S.D. Tex.)
We filed this collective action for servers at a Humble, Texas sports bar. The complaint alleged the bar required servers to put a percentage of their tips into a pool shared with back-of-the-house kitchen employees and other workers who are not eligible to receive tips, and did not correctly tell servers how the tip credit worked.
Cortez v. Casa do Brasil, LLC, No. 4:21-cv-03991 (S.D. Tex.)
We sued a Houston Brazilian steakhouse for its bartenders, servers, and gauchos. The complaint alleged the restaurant did not properly tell tipped employees about the tip credit and required them to hand over tips to repay the company for food order mistakes, cash drawer shortages, and customers who walked out on their tabs.
Fraijo v. RCI Hospitality Holdings, Inc., No. 4:25-cv-06175 (S.D. Tex.)
This is a pending FLSA collective action by former Bombshells restaurant servers alleging unlawful tip credit practices. The case is still being litigated, and nothing here is a finding by the court.
Were You Required to Tip Out?
If you work or worked as a server, bartender, or other tipped employee and had to share tips with a manager, the kitchen, or anyone else who does not serve customers, or had tips taken to cover shortages or walkouts, you may be owed back wages. Time limits apply, usually two years and up to three years for willful violations, so do not wait. Contact Tran Law Firm for a free case review.
