DOL Awards $39K to Workers for Employer’s Illegal Use of Tip Pool


An investigation by the Department of Labor’s (DOL) Wage and Hour Division (WHD) revealed that a Pittsburgh restaurant wrongfully required servers to share tips with managers and supervisors.

This is a violation of the  Fair Labor Standards Act’s  tip pool requirements [ Pittsburgh Restaurant, Distillery Pays Nearly $39K in Back Wages to 41 Workers After US Department of Labor Investigations Finds Illegal Use of Tip Pool ].

The WHD investigation found that the employer violated FLSA tip rules that prevent managers from retaining tips received by tipped workers. The employer failed to pay tipped employees the overtime wages they were legally due because overtime was calculated on the employee’s cash wage of $4 per hour instead of the federal minimum wage of $7.25 per hour. The employer also underpaid managers for overtime hours when they failed to include wages received by managers from the improper tip pool in overtime calculations. These practices violated the FLSA’s overtime regulations. The WHD recovered $38,951 for 41 workers.

WHD District Direct John DuMont commented that: “Food service workers rely on their hard-earned tips to make ends meet. Restaurant employers must understand that keeping workers’ tips or diverting a portion of these tips to managers or supervisors in a tip pool is illegal. He added that “As restaurants struggle to fill the positions they need to keep their doors open, those who deny workers their rightful wages are likely to find it more difficult to retain and recruit workers than those employers who abide by the law.” See Payroll Guide ¶18,260 for more information on tipped employees.

In fiscal year 2021,  the Wage and Hour Division conducted more than 4,200 investigations of food services establishments, recovering more than $34 million in back wages for more than 29,000 workers  nationwide.[/vc_column_text][us_image image=”3626″][/vc_column][/vc_row]