Per-Room Housekeeping and the Invalid Tip Pool
A 55-room limited-service inn pays housekeepers $5.25 per occupied room cleaned. Each housekeeper is scheduled 8 hours a day, six days a week. Last week, one housekeeper cleaned 96 rooms and clocked 49 hours; another cleaned 84 rooms and clocked 46 hours. The inn also operates a breakfast area where two breakfast attendants are paid $9.00 per hour plus a share of a tip pool that includes the front office manager and the owner. The assistant manager is paid a $760 weekly salary, routinely works 50 hours, spends about 60% of her time cleaning rooms and 40% on scheduling and paperwork, and is classified as exempt. The inn has no written tip-pool policy. The owner asks whether the payroll is compliant and what back wages might be owed.
1. Calculate the straight-time earnings, regular rate, and overtime premium for each housekeeper. Show whether minimum wage is met.
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Issue: Piece-rate pay is allowed, but the regular rate must include all straight-time earnings, and overtime must be paid after 40 hours.
Reasoning: Housekeeper A: 96 rooms x $5.25 = $504.00 straight-time earnings. Regular rate = $504.00 / 49 hours = $10.2857. Overtime hours = 9. Overtime premium = 0.5 x $10.2857 x 9 = $46.29. Total pay due = $504.00 + $46.29 = $550.29.
Housekeeper B: 84 rooms x $5.25 = $441.00. Regular rate = $441.00 / 46 hours = $9.5870. Overtime hours = 6. Overtime premium = 0.5 x $9.5870 x 6 = $28.76. Total pay due = $441.00 + $28.76 = $469.76.
Minimum wage is met in both cases because the regular rates exceed $7.25 and the employees receive additional overtime premiums. The error is not minimum wage; it is failure to pay the half-time premium for hours over 40. The inn must also keep records of rooms cleaned, hours worked, and the rate calculation.
Conclusion: The inn owes $46.29 to Housekeeper A and $28.76 to Housekeeper B for this week before any look-back calculation. A longer audit is likely to find additional unpaid overtime.
2. Is the tip pool lawful? What correction is required?
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Issue: The tip pool includes the front office manager and the owner.
Reasoning: Tips are generally the property of the employees who earn them. An employer or a manager may not keep a share of employees' tips, and a tip pool that includes a manager or owner is invalid even if the manager sometimes performs service work. The breakfast attendants are paid $9.00 per hour plus a share of an invalid pool. The lack of a written policy makes the arrangement harder to defend and increases the risk that the inn cannot show how tips were calculated or distributed.
Correction: Stop including the owner and front office manager immediately. Recalculate distributions for the period at issue, determine the amount improperly diverted, and redistribute it to the breakfast attendants. Adopt a written tip-pool policy that identifies eligible tipped employees, the distribution method, and the recordkeeping process. Do not use tips to satisfy the employer's minimum wage obligation unless the applicable tip-credit rules are met; here the attendants are paid a direct cash wage above the minimum, so the safer course is to treat tips as extra compensation.
Conclusion: The pool is unlawful as structured. The inn should make affected employees whole, document the correction, and remove managers and owners from any tip distribution.
3. Is the assistant manager exempt? If not, what overtime is owed and what classification steps should the inn take?
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Issue: The assistant manager is paid a weekly salary and classified as exempt, but spends most of her time cleaning rooms.
Reasoning: Exemption depends on duties, not just a salary. An employee whose primary duty is manual cleaning is generally not exempt, even if she also does scheduling and paperwork. Here, 60% of her time is cleaning, which suggests the primary duty is housekeeping rather than management. The salary is $760 for a 50-hour week, which produces a regular rate of $760 / 50 = $15.20. If she is nonexempt, the salary can be treated as straight-time compensation for all hours worked, but the inn still owes an overtime premium for 10 hours: 0.5 x $15.20 x 10 = $76.00. The total pay due for the week would be $760 + $76 = $836.00.
Classification steps: Review her actual duties over a representative period, not just the job description. If management is not her primary duty, reclassify her as nonexempt, require time records, and pay overtime. If the inn wants an exempt role, redesign the job so management, supervision, and independent judgment dominate and reduce the routine cleaning.
Conclusion: She is likely misclassified. The inn should pay the $76 weekly overtime premium and conduct a broader look-back for similarly situated assistant managers.