Wage and hour litigation continues to be brought in near-record numbers, with more than 4,300 Fair Labor Standards Act (FLSA) cases filed in federal court during the first half of 2016. A review of those filings, as well as several recent decisions, illustrates that the hospitality industry remains a mainstay in wage-and-hour cases.
In particular, recent litigation against restaurants has challenged application of the tip credit to servers who are performing nontipped duties. While the minimum wage under federal law is $7.25 per hour, the FLSA, and many state laws, permit employers to pay tipped employees less than that minimum wage where they take a “tip credit” (currently employers can pay employees subject to the tip credit $2.13 per hour under the FLSA and 40 percent of the statutory minimum wage under the Pennsylvania Minimum Wage Act). The tip credit allows employers to rely on the tips of patrons to make up for the remainder of the minimum wage amount, even though the tipped amount is not paid directly by employers to their tipped employees.
Breaking Down the Tip Credit
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