Keep Your Hands Out of the Tip Jar (and Other Celebrity Chef Lessons)

Restaurant owners and managers: sometimes the best lessons from celebrity chefs don’t happen in the kitchen.

The latest comes from MasterChef Graham Elliot, who recently settled a tip pooling lawsuit with Gregory Curtis and other waiters in Elliot’s Chicago restaurant for an undisclosed amount. The waiters claimed they were forced to share tips with non-waiters, and sued Elliot for lost wages. Staci Ketay Rotman (law firm Franczek Radelet) explains:

“Under federal law, employees may be required to participate in a tip pool only if the tips are distributed among employees who ‘customarily and regularly receive tips,’ and this generally is limited to personnel such as servers, bussers and service bartenders.”

Here’s a tip: heed these three recommendations to avoid your own legal troubles:

1. Keep your hands out of the tip jar:

“The FLSA defines an employer as ‘any person acting directly or indirectly in the interest of an employer in relation to an employee.’ Though a low-level supervisor is not an “employer’ under the FLSA, an employee with substantial managerial authority over the day-to-day operations of a business is the functional equivalent of the employer. If a manager functions as the employer in this regard, any tip sharing with that individual violates the FLSA.” (Duane Morris)

2. Don’t take a cut off the top, either:

“The latest news in celebrity chef wage and hour litigation is that eight New York restaurants owned by Mario Batali have agreed to settle $5.25 million to settle a class action lawsuit alleging that they illegally withheld tips from hourly service workers… The primary claim in the lawsuit was that management at the eight restaurants deducted 4 to 5 percent of each shift’s wine and other beverage sales from the restaurants’ tip pools.” (Franczek Radelet)

3. Make sure you give proper notice to employees when taking a “tip credit:”

“Under [the FLSA’s tip credit] provisions, an employer is allowed to pay tipped employees a cash wage of $2.13 and offset the remaining amount of the minimum wage by taking a ‘tip credit.’ … However, an employer may only take the tip credit if (1) the employee has been informed by the employer of the provisions of the FLSA’s tip credit subsection, and (2) the employee retains all tips received (except amounts paid into a valid ‘tip pool’ to be shared among employees that regularly receive tips).” (FordHarrison)

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