A proposed collective action claims Mactanz, Inc. violated federal labor law when it required its “tipped” employees to participate in an unlawful tip pool that partially distributed the workers’ earnings among ineligible employees.
According to the complaint, the plaintiff worked as a server at Mac and Bob’s Restaurant—a Salem, Virginia eatery owned by the defendant—where he was paid at a tip-credited hourly rate of $2.13. The plaintiff claims he was required to contribute to a tip pool that was not in line with Fair Labor Standards Act (FLSA) requirements because it included employees who do not customarily receive tips, such as dishwashers and food runners. The case argues the plaintiff should have received at least a full minimum wage of $7.25 per hour, as the defendant’s tip credit practices were improper. From the complaint:
“In order to lawfully apply a tip credit toward an employer’s minimum wage obligation, an employer must satisfy two conditions: 1) the employer must inform the employee that it will take a tip credit; and 2) tipped employees must retain all the tips they receive, except those tips included in a lawfully administered tip pool among employees who customarily and regularly receive tips.”