Here’s a tip: If you have tipped employees whose job duties involve non-tipped work, check how much of their time they spend doing those non-tipped job duties. If it’s more than 20%, you may owe them minimum wage for the time they spend doing non-tipped work according to an Eighth Circuit decision that the Supreme Court of the United States recently declined to review.
The Fair Labor Standards Act allows for a "tip credit" for "tipped employees," defined as employees who work in an occupation where they customarily and regularly receive more than $30 a month in tips. The tip credit allows employers to pay less than minimum wage to tipped employees as long as (1) the tip credit is not greater than 50% of the minimum wage, and (2) the wage plus the tip credit add up to minimum wage.
In Fast v. Applebee’s International (pdf), a class of Applebee’s bartenders and servers who received a tip credit argued that they were owed the full minimum wage for the time they spent doing non-tip-producing work, like cleaning, taking inventory, and rolling silverware. According to a DOL handbook interpreting the DOL’s dual job regulations, if tipped employees spend more than 20% of their time doing non-tipped "general preparation and maintenance" work, then the employer owes the employees minimum wage for that non-tip-producing time and cannot take the tip credit. Applebee’s took a tip credit for the workers’ entire shift and did not pay minimum wage for the time servers and bartenders performed non-tipped work (although with the tip credit, the employees still received at least minimum wage for all time worked).Continue Reading Supreme Court Denies Review in Fast v. Applebee’s: Tip Credits for Tipped Employees Who Do Non-Tipped Work