Tipping employees in various service professions (barbering, food service, etc.) is as American as apple pie. Unfortunately, the retention of employee tips by employers is a less common, but nonetheless pervasive, practice. Both employers and employees would do well to note that an employer’s retention of any employee tips (except as part of a valid “tip pool”) is illegal, as the 2018 amendments to the Fair Labor Standards Act (“FLSA”) make clear.
It was not always this way. For example, prior to the 2018 amendments, federal appellate courts were split on the issue of whether an employer could keep employee tips if the employer paid the employee above the minimum wage.
But the law has changed, and both employers and employees should know that employees have a right to demand and receive the tips paid by customers. The gains that employers can expect from skimming tips are simply not worth the risk of being caught in a lawsuit. In addition to requiring employers to pay the full amount of improperly withheld tips, the FLSA further entitles employees to additional liquidated damages, which is an amount equal to the improperly withheld tips, plus attorneys’ fees and expenses. (This means a court award of double the actual damages of the wrongfully withheld tips plus the attorneys fees and expenses of the litigation.)
Because the FLSA is a federal law, it applies to nearly all employers and employees in the United States, including those in the Cincinnati tri-state area (Ohio, Kentucky, and Indiana).
If you are an employee who has been shorted on their tips or an employer who needs to update its policies to accommodate the requirements of the FLSA, consider speaking to one of the labor and employment attorneys at the Finney Law Firm: Stephen E. Imm (513-943-5678) or Matt Okiishi (513-943-6659).