Tennessee Employment Lawyer Blog

Many people in this country unfortunately face discrimination at some point in their lives. There is discrimination in the workplace based on gender, disability, age, sexual orientation and more. However, most people expect to not be discriminated against about their own home. According to this case, a homeowner’s association discriminated against a family because they wanted to put in a therapeutic sun room where their two children, both of whom have Down syndrome could play and receive their physical therapy. If you or someone you care about has been discriminated against because of a disability or for any other reason, you should speak to our compassionate and knowledgeable disability discrimination lawyers with the Higgins Firm. We will work with you to make sure you receive the compensation you are entitled to for what you have been through.

The former Chestnut Bend residents Charles and Melanie Hollis filed a federal lawsuit in 2012 alleging that, when the Hollises wanted to build a therapeutic sun room onto their house, “the Chestnut Bend Homeowners Association denied their request to construct it based on concerns about the way the addition would look.” According to the lawsuit, the family asked for permission to build the sun room in 2011 and then for a year went back and forth with the Homeowner’s Association’s architectural review committee which fought the family on planned materials and the design of the sun room. The lawsuit also states that, “Each time additional information was requested, the Hollises complied with the request and each time their plans were rejected and their application summarily denied.” Since the Homeowner’s Association kept denying their request, the Hollises had to sell their house at a loss and move out of Chestnut Bend altogether in order to give their children the in- home care they needed. The Chestnut Bend’s HOA website states that, “this 168 home community shares a variety of lifestyles from active seniors to families with young children to singles and professional couples. Chestnut Bend strives to include all residents while building a strong sense of community and stellar example of fantastic Franklin family life!” However, according to the lawsuit, the Chestnut Bend’s refusal to let them build a sun room discriminated against their family and also constituted a violation of the Fair Housing Act, which among other things makes it illegal for agencies to refuse “reasonable modifications” enabling disabled residents to live comfortably within their own homes.

The Chestnut Bend Homeowner’s Association paid $156,000 to settle the lawsuit but they do not admit to any wrongdoing. Mike Vaughn, current president of the Chestnut Bend HOA board stated that, “We have architectural standards that everybody in the neighborhood has to follow. We followed the rules.” He also said that the Hollises’ lawsuit and allegations of discriminatory practices harmed the other residents of the Chestnut Bend Homeowner’s Association. Finally, he stated that,”We took it personally because we’re a welcoming neighborhood. ”

Unfortunately other homeowner’s associations have had similar disputes and faced similar lawsuits in other parts of the country. People should not have to face any type of discrimination but should definitely feel safe from it in their own homes. If you or someone you love has been discriminated against based on a disability or any other reason, then you should contact one of our experienced discrimination attorneys with the Higgins Firm. We care about our clients and will make sure you get the compensation you deserve for the discrimination you have had to deal with.

Contact us online or call 800.705.2121 for your free consultation.

This year the United States Department of Labor announced its 2015 Misclassification Initiative aimed at combatting the misclassification of employees as independent contractors. While this has been a priority for the DOL for the last several years, they seem to be getting really, really serious of it lately. And for good reason- a June 2013 Treasury Inspector General for Tax Administration (TIGTA) report stated: “The misclassification of employees as independent contractors is a nationwide issue affecting millions of workers that continues to grow and contribute to the tax gap.” A 2009 TIGTA report on misclassification said the lost tax revenue from this misclassification is more than $1.6 billion dollars annually.

Today, about 50 million workers – one-third of the workforce – are classified as independent contractors, freelancers, or temporary workers. This number is predicted to grow to 60 million workers – 40 percent of the workforce – by 2020. These workers do not receive benefits and safeguards such as unemployment insurance, workers’ compensation, and retirement benefits.

On July 15 of this year, the DOL issued a memo setting out how the Fair Labor Standards Act (FLSA), the federal law governing minimum wage and overtime among other things, should be applied in making the determination if an employee is truly an “independent contractor” or would be considered an employee under the FLSA and entitled to the benefits it guarantees. And they could not have been more clear as to the expansive coverage of the FLSA. 

The Department of Labor states “most workers are employees under the FLSA’s broad definition”.

According to the memo, independent contractors are individuals with economic independence, operating a business of their own. On the other hand, workers who are economically dependent on the company, regardless of skill level, are employees under the FLSA’s “very broad definitions.” The memo states the old definition based on the control the employer had over the employee no longer is controlling and courts should look at the “economic realities of the working relationship”.

In other words, a worker is entitled to minimum wage, overtime, and other provisions of the FLSA if, as a matter of economic reality, the worker is dependent on the entity. Is the worker economically dependent on the employer or truly in business for him or herself? This is the proper test to determine who is an employee under the FLSA.

The court listed six factors to look at when making this determination and gave examples of each:

  • Is the Work an Integral Part of the Employer’s Business?


    For a construction company that frames residential homes, carpenters are integral to the employer’s business because the company is in business to frame homes, and carpentry is an integral part of providing that service.

    Does the Worker’s Managerial Skill Affect the Worker’s Opportunity for Profit or Loss?


    A worker provides cleaning services for corporate clients. The worker performs assignments only as determined by a cleaning company; he does not independently schedule assignments, solicit additional work from other clients, advertise his services, or endeavor to reduce costs. The worker regularly agrees to work additional hours at any time in order to earn more. In this scenario, the worker does not exercise managerial skill that affects his profit or loss. Even if the worker’s earnings fluctuate based on the work available and his willingness to work more- the lack of managerial duties is indicative of an employment relationship between the worker and the cleaning company.

    How Does the Worker’s Relative Investment Compare to the Employer’s Investment?


    A worker providing cleaning services for a cleaning company is issued a Form 1099-MISC each year and signs a contract stating that she is an independent contractor. The company provides insurance, a vehicle to use, and all equipment and supplies for the worker. The company invests in advertising and finding clients. The worker occasionally brings her own preferred cleaning supplies to certain jobs. In this scenario, the relative investment of the worker as compared to the employer’s investment is indicative of an employment relationship between the worker and the cleaning company. The worker’s investment in cleaning supplies does little to further a business beyond that particular job.

    Does the Work Performed Require Special Skill and Initiative?


    A highly skilled carpenter provides carpentry services for a construction firm; however, such skills are not exercised in an independent manner. For example, the carpenter does not make any independent judgments at the job site beyond the work that he is doing for that job; he does not determine the sequence of work, order additional materials, or think about bidding the next job, but rather is told what work to perform where. In this scenario, the carpenter, although highly- skilled technically, is not demonstrating the skill and initiative of an independent contractor (such as managerial and business skills). He is simply providing his skilled labor.

    Is the Relationship between the Worker and the Employer Permanent or Indefinite?


    An editor has worked for an established publishing house for several years. Her edits are completed in accordance with the publishing house’s specifications, using its software. She only edits books provided by the publishing house. This scenario indicates a permanence to the relationship between the editor and the publishing house that is indicative of an employment relationship.

    What is the Nature and Degree of the Employer’s Control?


    A registered nurse who provides skilled nursing care in nursing homes is listed with Beta Nurse Registry in order to be matched with clients. The registry interviewed the nurse prior to her joining the registry, and also required the nurse to undergo a multi-day training presented by Beta. Beta sends the nurse a listing each week with potential clients and requires the nurse to fill out a form with Beta prior to contacting any clients. Beta also requires that the nurse adhere to a certain wage range and the nurse cannot provide care during any weekend hours. The nurse must inform Beta if she is hired by a client and must contact Beta if she will miss scheduled work with any client. In this scenario, the degree of control exercised by the registry is indicative of an employment relationship.


    The bottom line is: the issue as to whether a worker may be classified as an independent contractor needs to be looked at on a case by case basis. 

    You would probably be best served by consulting an attorney experienced in FLSA litigation as to what your rights may be under the act if you feel you have been improperly characterized as an independent contractor.

    We have handled many of these cases successfully and would be glad to review your case for no charge. feel free to contact our Tennessee Employment Law Office and we will be glad to answer any questions you may have about your rights under the FLSA and other federal and state laws.

According to the United States Department of Labor, minimum wage would need to  $11.00 per hour to equal the same spending power to equal its buying power of the late 1960s. Currently the minimum wage is only $7.25 and for tipped employees, it remains $2.13. It has in fact, not been increased since 1991. $2.13 in 2105 is equivalent in spending power as $1.21 in 1991.

So many workers in America rely on their tips to survive. Servers, delivery drivers, bartenders, hotel workers, etc.  Unfortunately for these workers, the law often allows for employers to pay them at a rate much lower than the standard minimum wage. The Fair Labor Standards Act permits an employer to take a tip credit toward its minimum wage obligation for tipped employees equal to the difference between the required cash wage (which must be at least $2.13) and the federal minimum wage. Tipped employees are those who customarily and regularly receive more than $30 per month in tips.

One thing that needs to be clear to all tipped employees: “Tips are the property of the employee”.

That is not to say that sometimes Tip pools may be used by these establishments; more importantly, however, is the fundamental rule of tip pools: No employers are allowed in the pool. Tips belong to employees, not to the company. And, under the Fair Labor Standards Act (FLSA), the federal law that governs wages and hours, “employer” includes not just the owner or officers of a company, but anyone who acts in the employer’s interests regarding an employee. In other words, managers count as employers who can’t share in a tip pool.

However, whether this rule applies to a particular workplace depends on the manager’s job duties. Plenty of employers refer to low-level employees as “assistant managers” or “shift supervisors,” without giving the employees the authority that would ordinarily go along with such a title. These employees typically do much of the same work as line employees, with a few extra responsibilities (such as scheduling, deciding when employees may take their breaks, and so on). Despite their name, these employees probably can share in a tip pool, because they aren’t true managers as the law intends the term.

If your manager is taking part of your tips, or if you feel like the tip pool you are forced to take part in is illegal, feel free to contact our Tennessee Employment Law Office and we will be glad to answer any questions you may have. We have successfully represented many individuals and groups of employees in helping them recover what is rightfully theirs under the law.


Whether you are going to a forty an hour a week job that you have been employed in for many years or whether you are working at an internship for maybe a little pay and some more experience the Fair Labor Standards Act and minimum wage laws still need to be followed. Unfortunately, many companies and businesses find ways around paying their employees what they deserve and what they should be paid by law by not properly logging the hours they work, telling them to take parts while not on the clock or classifying improperly so they are exempt from overtime pay laws and requirements. If you or someone you work with feel that you have been improperly paid the wage you earned or were not paid properly for overtime hours, then you should speak to a Tennessee employment and overtime pay lawyer with the Higgins Firm. We will work with you to see to it that you get the compensation you deserve for the hard work you have done.

According to this lawsuit, the plaintiffs worked as much as forty hours a week for free on programs like the Howard Stern Show and other Sirius programs. This was a violation of their rights under the Fair Labor Standards Act and state minimum wage laws. The company stated that it still believes its internships were legal, but settled to avoid costly litigation according to reports. Representatives for either side of the lawsuit were not available for comments.

This proposed settlement comes a month after the New York-based 2nd U.S. Circuit Court of Appeals discussed the applicable test to determine whether unpaid internships are legal in lawsuits against Fox Searchlight Pictures Inc. and Fox Entertainment Group Inc. In this case involving unpaid internships, Sirius XM Radio Inc. has agreed to pay as much as $1.3 million to settle litigation by some 1,800 ex-interns. The Sirius settlement must still be approved by a judge before it is finalized.

Unfortunately, many businesses often find ways around paying their employees what they are entitled to under the law. They may ask employees to clock out early and still do work, they may ask them to take an unpaid lunch hour, they may give them a title they feel makes them exempt from overtime pay and minimum wage requirements such as referring to them as an independent contractor, executive, manager or administrator, or they may not pay them for work related tasks such as meetings, sending e-mails, running errands for the company or returning phone calls. Whatever the reason may be, companies and businesses are under a legal obligation to pay their employees fair wages and overtime pay for hours they work in a single work week and for any hours that they may work over forty in one week. If you or someone you know feels like you have been denied the pay that is rightfully yours by law then you should contact one of our experienced and knowledgeable Tennessee employment and minimum wage lawyers at the Higgins Firm. We care about our clients and understand how important your pay is to you and to your families. We will review your case, answer any questions you may have and make sure you get the compensation you need for this violation of your rights. We will also fight on your behalf to make sure these companies are held responsible for their actions and for any violations.

Please contact us today online or by calling 800.705.2121 to discuss any questions you may have as well as your legal options.

Recently, the Equal Employment Opportunity Commission ruled that sexual orientation discrimination is already illegal according to Title VII of the Civil Rights Act of 1964. This groundbreaking decision by the EEOC declares that employment discrimination against gay, lesbian, and bisexual workers is unlawful in all 50 states. The commission already found that Title VII bars discrimination on the basis of gender identity, protecting trans employees. According to the act, Title VII prohibits discrimination on the basis of sex, including, the Supreme Court has ruled, irrational sex stereotyping.
The EEOC states that if an employer discriminates against a gay employee for being too “feminine” or a lesbian employee for being too “butch”, this is illegal sex stereotyping. Now the commission states that, if an employer does not approve of a lesbian employee’s sexual orientation, they are objecting to the fact that a woman is romantically attracted to another woman. This objection is based on irrational, stereotyped views of femininity and womanhood. If an employer discriminates against his lesbian employee, that discrimination is based in large part on her sex, and on his anger that she does not fit into her gender role.

The EEOC also stated that, sexual orientation discrimination is “associational discrimination on the basis of sex.” When a homophobic employer mistreats a gay male employee, he does so because he dislikes the fact that his employee dates other men. This means that the employer took that employee’s sex into account while making the decision to treat him unequally. Such discrimination is obviously sex-based and illegal under Title VII.

The decision made by the EEOC only applies to federal employee’s claims as of right now but the EEOC represents private employees, as well, and helps employers and employees settle discrimination claims without a lawsuit. According to the new guidelines, all sexual orientation discrimination will be considered illegal, empowering gay private employees to lodge discrimination complaints. Until the Supreme Court weighs in, lower courts may choose to accept or reject the EEOC’s presentation of Title VII.

Unfortunately even with laws and guidelines in place workplace discrimination based on sexual orientation, race, gender, age, or disability occurs all too often. If you or someone you work with feels you have been turned down for a job, terminated or discriminated against in any way in the workplace, it is advised that you contact a compassionate and experienced employment and discrimination lawyer at the Higgins Firm. We will listen to you and answer any questions and concerns you may have. We know that you work hard for your money and We will fight for you and see to it that you get the get any compensation you are entitled to for this violation of your rights. We will also make sure the people or company responsible is held accountable for their actions.

When people go to work each day to make money for their families and loved ones they expect to be paid fairly and treated with respect. Unfortunately, even though it is illegal, some companies and businesses discriminate against employees based on age, gender, disability and sexual orientation. If you feel that you have been discriminated against or fired at your workplace for any of these reasons, then it is important that you speak to a Tennessee employment and discrimination lawyer with the Higgins Firm. We will review your case and get you the compensation that is rightfully yours by law for the discrimination you have faced. You can contact us online or by calling 800.705.2121 to discuss your case and any questions you might have.

If you are working over forty hours a week and are not currently eligible for overtime pay or wages, you may be in luck. The Department of Labor and the Obama administration are on the verge of changing an overtime pay rule that would raise the current overtime threshold of $23,660 per year to $50,440 per year. This would extend overtime pay to millions of American employees. If you feel that you have wrongly denied overtime pay, you should speak to a Tennessee overtime pay and employment lawyer with the Higgins Firm. We will fight for you to help you get the compensation that is rightfully yours.

Currently, the law states that any salaried worker who earns below the threshold must receive overtime. The current threshold of $23,660, or $455 per week, lies below the poverty line for a family of four. The new rule would raise that to $50,440 or $970 per week, which would be closer to the median household income. This rule change would mean that more American workers would qualify for overtime pay. The current overtime threshold is not indexed for inflation and only been updated once since 1975. It only covers twelve percent of salaried employees. If the threshold is raised it would bring it back in line with the 1975 threshold, after inflation.

The current rules for overtime pay exclude white collar workers with titles such as “executive, administrative and professional” from receiving overtime pay. This means that an office worker or secretary might be exempt from overtime pay. Many businesses and companies get around paying their employees overtime pay by giving them nominal supervisory responsibilities. Although the Department of Labor had stated the new rule would make changes to this definition allowing more workers to qualify for overtime pay benefits, the proposed regulation did not include this change.

President Obama recently opined in an op-ed article, “Right now, too many Americans are working long days for less pay than they deserve. That’s partly because we’ve failed to update overtime regulations for years.”

Those opposed to this new rule state that it will kill jobs and force employers to cut hours for employees who receive a salary. Many companies such as McDonald’s have computers in place to alert them when an employee has worked forty hours so they can send them home and avoid paying them overtime benefits.

Opponents of this new proposed rule feel that this will happen in many more businesses if the overtime threshold is expanded. If employees’ hours are cut to avoid overtime pay requirements, this could also make them ineligible for other benefits. Aloysius Hogan, a senior fellow at the conservative Competitive Enterprise Institute, said it will have a “job killing effect.” Hogan said businesses will be incentivized to lay off higher-paid executives and replace them with lower-paid workers.

Many hard-working Americans are struggling to make ends meet to support their families and their loved ones and if you are denied your overtime pay benefits, this can make things even more difficult. If you or someone you care about has been denied overtime pay for hours you have worked over forty in a week, then you should contact an experienced overtime pay and employment attorney at the Higgins Firm. We will review your case, answer any questions you may have and work with you to make sure you receive the compensation you deserve for the hard work that you do every single day.

Please contact us today online or by calling 800.705.2121 to discuss your legal options.

Family Medical Leave has been around for a while now, but the Administrative Office of the US Courts just released a report stating that there was a 26.3 % rise in Family Medical Leave Act lawsuits in 2014. There may be a number of reasons for this rise. So what should you do if you are an employer dealing with Family Medical Leave requests and what should you do if you are an employee that feels like you have been wrongly denied your FMLA? Well, here are some suggestions and tips to keep in mind for employers as well as employees. If you have more questions or feel that you may have a FMLA case, then you should speak to one of our FMLA lawyers with the Higgins Firm. We will work with you to make sure your rights are upheld.
It is important to first discuss the many reasons why these cases may be on the rise. One of the main reasons for the increase is because the laws around Family Medical Leave are becoming more well known and the Department of Labor is also expanding the law to include same-sex couples. So, it makes sense that if more people know about the law that more people will use it. The second reason is that Family Medical Leave is defined as a “serious health condition”. This is very vague and therefore, many employees with chronic conditions may find it easy to request and be given the leave.

Many medical professionals also seem very willing to offer certification to employees requesting intermittent FMLA leave even if the reason is not very clear. Also, once an employee receives certification for FMLA, it often becomes easier for them to take the leave for a day or two if they just want a day off because they will not face consequences for that time. Finally, lawsuits may be increasing because many employers may not fully understand the FMLA laws and their requirements. It is important for employers to learn about the laws so they do not fail to realize when an employee may legitimately need the leave. This will help to avoid violations and thus more lawsuits.

So, now that you know the many possible reasons behind the rise in FMLA lawsuits, what should employers and employees do? It is important that employers remember not to ignore their obligations according to FMLA laws. If you as an employer feel that an employee’s application and doctor’s note for the leave are unclear, you are allowed under the law to ask for more information before granting the leave. The employee then has to follow up and respond to this request. If the leave becomes certified, employers are allowed to monitor how often the leave is used. If more than was requested is being used, you have the right to request recertification.

It is important that both employees and employers educate themselves about FMLA laws and know what is expected of them. If you are an employer and feel like FMLA is being abused or if you are an employee and feel that you were denied the leave you need or faced retaliation after taking your leave, then we recommend that you talk to one of our  Tennessee Family Medical Leave Act attorneys with the Higgins Firm. We can answer any questions you may and help to determine if you may have a case.
Feel free to contact us online or by calling 800.705.2121 to discuss your legal options.

Are you an employee that has been misclassified as being exempt from overtime pay? If so, you may be in luck. The Department of Labor is planning to pay closer attention to working conditions and improper pay practices this year, including those non-exempt employees that are being denied overtime pay due to a misclassification. If you feel that you have been wrongly denied your overtime pay, then you need to speak to an overtime pay and employment lawyer with the Higgins Firm. We know that employees work hard for their money and we will help you to get the compensation you deserve.
According to the Mainstreet news source, the Department of Labor’s increase in attention to employers and their pay practices is due to a rise in requested funding and having more staff of their own. The 2015 budget for the Department of Labor includes $11.8 billion in discretionary funding, which includes an increase of more than $41 million for the Wage and Hour Division and some $14 million to help with the misclassification of employees as independent contractors. The U.S. Secretary of Labor, Thomas Perez, stated that, “This budget request works to ensure that Americans have the skills they need for the in-demand jobs of today and tomorrow and also protects the health, safety and retirement savings of workers.”
The Fair Labor Standards Act states that a non-exempt employee is one who is eligible for overtime pay after working forty hours per week. The Department of Labor will audit and investigate companies that have received complaints from their employees or those seeking employment. These investigations can include private interviews by the investigator of company employees.
The companies most likely to have improper wage and overtime practices include industries such as oil and gas, residential construction, restaurants, hotels, janitorial services, moving companies, retail stores and home health care services. “The Department of Labor is focusing its enforcement efforts on fissured industries, in which the use of franchising, independent contractors, subcontracting and third-party intermediaries such as temporary employment agencies or labor brokers has distanced employers from their workers,” according to news source, XpertHR’s Michael Cardman.
Companies that comply with wage and hour laws and properly classify their employees might still be subject to an evaluation by the Department of Justice. In order to help avoid such a costly evaluation, it is important that companies make sure all time and payroll records and I-9 forms are organized and updated. They should also make sure that all of their employees that are not exempt from overtime are accurately recording their hours and that those employees that are exempt meet the legal criteria for the exemption.
Employers of corporations and managers or owners of individual or independent businesses are responsible for any wage and hour violations and will be held accountable for any and all unpaid overtime and minimum wage for the last three years. This includes liquidated damages, and the plaintiffs’ attorney’s fees.
If you or someone you work with has been denied the overtime pay or minimum wage that you are entitled to by law, then you should contact one of our experienced overtime pay and employment attorneys with the Higgins Firm. We care about our clients and will help to make sure that the company responsible is held accountable for their actions.
Feel free to contact us online or by calling 800.705.2121 to discuss your legal options.

According to a Final rule recently adopted by the Department of Labor, same-sex couples that are legally married will now be included in the definition of spouse under the Family Medical Leave Act. This means they will be eligible to use FMLA in order to care for their spouse or a family member even if their marriage is not recognized in the state in which they live. The rule became effective on March 27, 2015, but one state’s Attorney General has filed an action seeking to enjoin implementation of the Rule.
Under the Family Medical Leave Act’s “state of residence” rule which had previously been in place since the 1990s, employees were not eligible for protections under FMLA if they were in a legal same-sex marriage in one state but moved to or resided in a state that did not legally recognize the marriage. The new rule known as “place of celebration”, determines eligibility by looking to whether the marriage was valid in the state where the couple was married, regardless of where the couple resides. According to the Department of Labor, the Final Rule’s definition of “spouse” “expressly includes individuals in lawfully recognized same-sex and common law marriages and marriages that were validly entered into outside of the United States if they could have been entered into in at least one state.”
On March 18, 2015, Texas Attorney General Ken Paxton commenced a lawsuit against the U.S. Department of Labor, seeking a temporary and permanent injunction to block the Final Rule. In its complaint, Texas argues that United States v. Windsor allows states to decide whether to recognize out-of-state same-sex marriages, and that the Final Rule invalidly attempts to abrogate the States’ sovereign immunity and thus “flies in the face” of the Supreme Court’s decision.
If the Final Rule goes into effect, eligible employees will be able to take FMLA leave to care for a same-sex spouse with a serious health condition, and take military caregiver leave or qualifying exigency leave when a spouse is on covered active duty. This amendment does not change FMLA rules for domestic partnerships or civil unions. Employees in same-sex marriages will also be able to take FMLA leave for step children. Before this new rule, FMLA leave could not be taken for step children of same-sex couples unless the employee was responsible for the day to day care or financially supported the child. Employees will also been able to take leave to care for a step parent who is the employee’s parent’s same-sex spouse.
If you feel that you have been wrongfully denied FMLA leave or were fired after taking leave or if you have questions about how this new rule may affect your case, it is strongly advised that you contact one of our experienced and compassionate Tennessee FMLA attorneys with the Higgins Firm. We will work with you to see to it that you receive the compensation you are entitled to for your loved ones.

Contact us online or call 800.705.2121 for your free consultation to discuss your legal needs and options.

So you have a wonderful dinner at your favorite restaurant and you would like to show your gratitude to your fabulous waiter. As such, you give him or her a generous tip. Unfortunately, these hard working waiters or waitresses do not always get to keep their tip. This is because many restaurants have what is known as a “tip pool”. Not only may this be surprising to the customer but just think how that poor hard working waitress feels. Regardless, it is important for the employees to know that not all tip pools are legal. If the tip pool is found to be illegal the employee may be entitled to a full hourly wage for hours worked, liquidated damages and attorney’s fees.

The difference between a legal and illegal tip pool depends on a few factors. These factors are often intertwined with the employer’s legal ability to take a “Tip Credit” to pay the lower hourly minimum wage of $2.13 per hour. Specifically, for a tip sharing program to be legitimate the tips can only be shared among employees that regularly and customarily receive tips. This would include employees such as bartenders, counter staff, waiters, waitresses and sometimes hostesses. It would not include cooks, managers, chefs or owners. This would be mainly those employees that aren’t paid at the $2.13 minimum wage.

Taking this a step further, for the employer to be allowed to take a credit for the tip and reduce the hourly wage to $2.13 an hour the following must occur:

1. The employer must notify the specific amount of cash wage the employee will receive. This cannot be less than $2.13 per hour.
2. The tip credit that the employer claims can’t exceed the actual amount of the tip received by the employee 3. The employee must be allowed to keep all tips earned except for the amount to be legally contributed to the tip pool 4. The tip credit will not apply to the employee unless the employee has been informed of these tip credit provision. It is important to note that this notice can be oral or written.

If an employer has set up an illegal tip pool or has not complied with the foregoing tip credit provisions they may have to pay the difference between the $2.13 an hour paid and the current minimum wage. The employee would also be allowed to keep all tips earned.

Also, if the employer decides to use the tip credit provision they must be able to show that the employee earned a minimum of $7.25 an hour. In other words, if you take the $2.13 an hour paid and all tips earned by an employee during a week and divide that amount by the number of hours worked then the average wage should equal or exceed $7.25 an hour.

Finally, do not forget about overtime. If you work over 40 hours per week you are still entitled to 1.5 times your hourly pay for the hours worked over 40. This is probably one of the most overlooked FLSA violations around.
Continue Reading