Tipping Rules Under the FLSA – The Red Robin Case
The Fair Labor Standards Act, which ensures that employees are paid fairly, has always permitted an exception to the standard minimum wage for tipped employees. To fall under the tipped employee exception, the employee must make at least 30 dollars per month in tips. The current minimum wage in Pennsylvania for tipped employees is $2.83 per hour (the current federal minimum wage for tipped employees is $2.13 per hour). The employer then gets a “tip credit,” which means that the employer does not have to pay additional wages to the employee provided his or her tips are equivalent the the standard minimum wage or higher. If the employee’s tips plus his or her cash wage does not equal the standard minimum wage, the employer must supplement the employee’s pay so that they do make the minimum wage. An employer cannot pay an employee in this manner unless he or she has informed the employee is informed of the law and all tips are kept by the employee who received them, except for when employees pool tips. 29 USC § 203(m)
The tip pooling has caused some substantial litigation in the past, and is now the focus of another lawsuit. The law states that tip pooling can only occur among employees who customarily and regularly receive tips. This typically means that back of house staff, including cooks, cannot be part of the tip pooling (exceptions can by made for hibatchi cooks, who have direct interaction with customers and who often share tips with servers). Managers cannot participate in tip pooling. This can work in several ways in restaurants- servers can pool all their tips together and then split the pot evenly at the end of a shift, or commonly, servers will “tip out” bartenders and bussers. The issue with Red Robin was that Red Robin required that the expediters be part of the tip pool. Expediters work in the kitchen, doing the finishing touches, like adding garnishes or sauces, prior to the food being delivered to the customer and are normally called expos.
Two servers brought a class action against Red Robin for requiring them to tip out the expos, arguing that the expos did not customarily and regularly receive tips. Red Robin filed a motion to have the case dismissed, but a Middle District of Pennsylvania federal judge decided in favor of the Plaintiffs, and said they should have the chance to prove their case. Red Robin’s argument for permitting expos to participate in the tip pool was that expos customarily and regularly received tips, not from customers but the pool itself, essentially arguing that because the expos were part of the tip pool, they should be part of the tip pool.
The court found that a relevant inquiry was whether or not the employees had any direct interaction with customers. Servers obviously do. Other areas have permitted hostesses to be part of the tip pool because of the significant amount of interaction with customers. But had absolutely no interaction with the customers, and the court found that they were more similar to back of the house staff, allowing for the possibility of plaintiffs to recover their tips from the employer and for the policy to change in the future.
As a side note, expos at Red Robin are either always expos or come from the cooking line to expo meals. At many other restaurants, expos are servers who are expoing only for that shift, but customarily and regularly receive tips while serving. The court may have found differently in that case.