Confusion Around Wage and Hour Law Can Be Costly for The Restaurant Owner.

Most restaurant owners know that federal wage law (“FLSA”) permits employers to take a “tip credit” and pay employees who traditionally receive tips—such as servers and bartenders— wages that are less than the federal minimum wage as long as the tips make up the difference. And it goes without saying, following all other legal requirements is mandatory. The FLSA defines a “tipped employee” as “any employee engaged in an occupation in which he customarily and regularly receives more than $30 a month in tips.” For many employees, tips make up a significant part of their earnings. The onset, new hires should be informed whether they will be classified as tipped employees and advised of all applicable legal requirements

Truth be told, many restaurant owners fail to correctly uphold this preliminary law “assuming” that they (and their tipped employees) know the requirements, however, their assumptions are frequently erroneous. Part of this failure is simply because the law is complicated, contradictory and requires knowledge of the regulations at both the federal and state levels.

Federal wage and hour law (FLSA) generally requires covered employers to pay employees at least the current $7. 25 per hour federal minimum wage. As an employer, you may take a tip credit as an allowance against your minimum wage obligation as long as you accurately calculate your employees’ wages. An employer may take a tip...

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