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Experiencing Wage Theft? How to Know and How to Fix It

by Gretchen Brown
April 11, 2019 | Money

At the end of every shift as a server in Okoboji, Iowa, Rachel was required to pay up.

Ten percent — no more, no less — of her sales for the day would go to her manager as part of a “tip pool.”

The manager would then dole out the tips to bar backs, bussers and hosts, in addition to the tipped servers.

The policy was universally resented by the wait staff, who were told that if they didn’t like it, they could quit.

Because she had to share her earnings, “I lost motivation to wait on as many customers as I would usually want to," said Rachel, 31, who asked to go by only her first name. “What was my motivation for higher sales just to tip out that much more at the end of the night?”

Practices like tip pooling are common in the restaurant industry. Rachel, who has worked on and off in the service industry since she was 14, had seen it before, though every business does it a little differently.

That doesn't mean it's always right.

If your employer’s practices are making you raise your eyebrows, what should you do about it?

Check your state’s labor laws

Every state is a little different when it comes to what’s legal.

Illustration of staff working at pizzeria. Wage Theft pbs rewire
Often, if you think something sketchy is happening with your pay, there’s a good chance you’re not the only one.

Federally, mandatory tip pools like Rachel's are legal, as long as the pools include only “regularly tipped” employees, and that everyone knows about it ahead of time.

That means waiters, waitresses, bussers and service bartenders can be part of a tip pool.

Dishwashers, cooks, chefs and janitors can’t. Neither can managers.

In many states, your employer is allowed to pay you less than minimum wage, as long as your tips make up the difference each pay period.

Other states have stricter guidelines.

“In Minnesota, the tips are the sole property of the employee, and the employer cannot require a direct service employee to pool his or her tips,” said Reena Desai, an attorney in Minneapolis who specializes in employment and labor law.

“Direct service” employees are people like bartenders and servers, who come in direct contact with customers.

Voluntary tip pools are allowed. But under Minnesota law, bus people, dishwashers, cooks or hosts can’t be included in a tip pool, Desai said, with some exceptions.

That doesn’t mean it doesn’t happen.

In 2017, popular Minneapolis brewery and restaurant Surly settled a class action lawsuit that claimed it illegally forced workers to pool tips.

The lawsuit was filed by a former bartender.

These rules about tipping and pay are under what’s called the Federal Labor Standards Act, and many states have more labor laws of their own.

You can contact the U.S. Department of Labor and file a claim if you believe you’re not being paid fairly.

Pay attention to your pay

It’s pretty easy to tell if your manager is swiping your tips. But there are other types of wage theft you might not pick up on.

One of the most common ways this happens is the way your work is classified.

Your office might have you down as an “exempt” worker, meaning you’re not eligible for overtime, when you should be “non-exempt.”

That’s illegal.

Typically, blue collar and other non-salaried workers are eligible for overtime pay.

If your workplace wants you to work any hours “off the clock,” that’s also wage theft, and it’s against the law.

Talk to your coworkers

Often, if you think something sketchy is happening with your pay, there’s a good chance you’re not the only one.

Talk to the people you work with about it, and see if they’re experiencing the same thing.

That’s especially important if you’re a remote worker who’s not always in touch with your colleagues. Make a point to reach out if something is fishy.

If you feel comfortable, you can talk to your manager as a group to bring up the problem and say, “This doesn’t seem right.”

You can also talk to an employment lawyer in your area, if you want additional guidance.

If you decide to make a claim with the Department of Labor, they can open an investigation into your workplace.

You also don’t have to worry about getting fired for speaking out. Desai said there are federal protections for asserting your rights when it comes to your wages.

“If an employee complains about not being paid all their wages, and they’re fired the next day, I think they would have a retaliation claim as well as an unpaid wages claim,” she said.

One thing to remember is that you don’t have an unlimited amount of time to complain about your employer.

There’s a statute of limitations, which means you’ve only got about two to three years to file a lawsuit.

[ICYMI: How to Stand Up for Yourself at Work]

Speaking out can be worth it

Sometimes, the people who do the right thing do win out. Last month in Minnesota, two workers filed a lawsuit against chain restaurant Punch Bowl Social, claiming the restaurant forced servers and bartenders to share tips with serving assistants, food runners and bar backs.

The plaintiffs, a server and a bartender, had actually tried to bring up the policy to management, Desai said.

They had spent a lot of time in the service industry, and knew the way things were running at Punch Bowl didn’t quite add up.

“(Punch Bowl Social is) going to probably say that they’re different in that they operate in this team environment,” said Desai, who is representing the plaintiffs. “But in our position, that wasn’t the case.”

In the case of the Minnesota brewery Surly back in 2017, a judge said the business had violated the Minnesota Fair Labor Standards Act, the state’s labor law.

The bartender, James Russell Conlon, won $15,000.

Gretchen Brown
Gretchen Brown is an editor for Rewire. She’s into public media, music and really good coffee. Email her at [email protected], or follow her on Twitter @gretch_brown.
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