Law Office of Marc J. Smith, LLC
Employment Law and Litigation Counsel

Employment Law Blog

“Working” Tavern Owner Not Entitled to Share in Tip Pool

In a recent case of first impression in the Fourth Circuit, the Court ruled that the owner of a restaurant/tavern, who is also a bartender, may not lawfully participate in his employee bartenders tip pool under the Fair Labor Standards Act. In Gionfriddo v. Zink, the court observed that [e]very court that has considered the issue has unequivocally held that the FLSA expressly prohibits employers from participation in employee tip pools.

While the general rule is that employees must be paid minimum wage, i.e., $7.25 per hour under the FLSA, an exception exists for tipped employees such as bartenders and waitstaff. Tipped employees are those who customarily and regularly receive more than $30 a month in tips. For employees who can legitimately be classified as tipped employees, an employer satisfies the FLSA if it pays tipped employees at least $2.13 per hour, and that wage, combined with tips, equals or exceeds $7.25 per hour.

In its ruling, the Court held that it would be an anathema to the purpose behind the FLSA to simultaneously allow [an owner] to take tips from a collective tip pool that was set up to allow him to pay his employees at a rate substantially below the minimum wage and that a contrary finding would broaden the FLSA s tip credit provisions to a point where they would become meaningless.

Marc Smith