Vaught Firm, LLC, 1910 Pacific Avenue, Suite 9150, Dallas, Texas 75201
Employment Lawyer - Call Now (469) 999-6374
Employment Lawyer - Call Now (469) 999-6374
Under the Fair Labor Standards Act ("FLSA"), which includes essential FLSA tip protection, employers cannot take any portion of an employee's tips for business-related expenses such as: uniforms, TABC certification, food handler license, register shortages, customers who walk out without paying their bills, issues with customer food or drink orders, inventory losses, and charging the full menu price for employee meals (only the actual cost of the meal can be charged, not the price that includes profit or the menu price).
Furthermore, the FLSA prohibits employers from sharing employee tips with owners, managers, or supervisors.
For tipped employees who are compensated on a tip credit basis (for example, receiving $2.13 per hour while relying on tips to reach at least the $7.25 minimum wage), there are specific regulations under the tip theft law. Employers cannot operate a tip pool that includes non-tipped employees, such as cooks, dishwashers, managers, or supervisors. They also cannot require the employee to cover costs for uniforms, TABC certificates, food handler certificates, or other expenses that the law assigns to the employer. Additionally, they cannot mandate that employees use their own vehicle or pay for fuel and maintenance without reimbursement to deliver customer orders.
Employers must provide a tip credit paid employee with advance notice of using a tip credit pay system.
If your employer violates the FLSA tip protection laws, they may owe you substantial compensation. If an employer unlawfully retains some or all of your tips, you could be entitled to double the amount of tips improperly kept by your employer. Similarly, if your employer uses a tip credit under the FLSA minimum wage law (like paying you $2.13 per hour and depending on tips to cover the $5.12 difference to meet the $7.25 per hour FLSA minimum wage) and unlawfully retains tips or charges you certain costs, or fails to give you the required FLSA tip-credit notice, they might typically have to pay you double the tip credit taken for all hours worked during covered workweeks.
Overtime wages for tip credit paid employees must be calculated at one and a half times the minimum hourly wage, less the tip credit claimed by the employer. For a tip credit paid employee earning $2.13 per hour (with a $5.12 tip credit), the overtime hourly rate would be $5.76 per hour. If the employer incorrectly calculates overtime as time and a half of a tip credit paid employee's hourly rate (like $2.13 times 1.5, equating to a $3.20 overtime hourly rate), then that employee is not receiving all the overtime wages owed to them.
The FLSA mandates that an employer who violates the tip protection law also pay the legal fees and costs to the attorney of the prevailing employee. Importantly, the FLSA does not require employees to cover legal fees for the employer.
For more information about your tipped employee legal rights, contact Dallas attorney Allen Vaught to learn more about the protections available under the FLSA.
This webpage should not be considered legal advice. For a no-cost initial consultation to understand your tipped employee legal rights and the applicable FLSA tip protection in relation to your specific situation, contact the Vaught Firm. The content of this page is based on federal law within the U.S. Court of Appeals for the Fifth Circuit and Texas state law, including information on tip theft law.