The 2% House Pool and the Shift Supervisor
Bayside Grill in Orlando employs 14 servers, 6 kitchen staff, and one shift supervisor, Marco. Servers are paid a $9.98 cash wage plus tips, and the employer takes a $3.02 tip credit toward the Florida minimum wage. House policy requires each server to contribute 2% of gross sales to a 'house pool' that is split among kitchen staff, bussers, and Marco. Marco mostly expedites and schedules, but he covers three tables on busy nights. Last Saturday, server Elena had $1,400 in gross sales, received $260 in tips, and worked 40 hours. Her 2% contribution was $28. Marco received $40 from the pool that night. Elena also spent 45 minutes before service rolling silverware and was told to clock in only when the doors opened. Another server, Tanya, was required to pay $15 to the pool even though she had no table sales because she was training. The employer does not keep a record of the pool distributions. Elena asks whether the pool is lawful and what she is owed.
1. Is the house pool lawful? Analyze tip-credit rules and who may share tips.
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The pool is unlawful in its current form. Under the FLSA, an employer may take a tip credit only if tipped employees retain all tips except valid tip-pool contributions to employees who customarily and regularly receive tips. A supervisor or manager may not participate in a tip pool, even if he occasionally serves tables. Kitchen staff are not traditional tipped employees; since the 2018 amendments, they may be included only if the employer does not take a tip credit and pays the full minimum wage. Bayside takes a $3.02 tip credit, so including kitchen staff invalidates the pool. Tanya's $15 contribution when she received no tips is also unlawful. The lack of pool records makes it impossible to verify distributions and compounds the violation.
2. Calculate potential back wages for Elena for the week, stating your assumptions.
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Elena worked 40 hours at a $9.98 cash wage = $399.20. Using the Florida minimum wage in effect for this scenario ($13.00), the tip-credit shortfall is $3.02 x 40 = $120.80. Because the pool includes a supervisor and kitchen staff, the employer may lose the tip credit and owe the full minimum wage difference. Her $28 contribution was also an unlawful diversion of tips; even if part went to valid bussers, the invalid participants taint the pool, so at minimum $28 should be restored. The 45 minutes of off-clock silverware work is compensable: 0.75 hour x $13.00 = $9.75, plus an overtime premium if total hours exceed 40. Under a 40-hour assumption, total conservative back wages are $120.80 + $28.00 + $9.75 = $158.55, plus any overtime premium and liquidated damages. Tanya is owed the $15 she paid into the pool.
3. What records and practices should be corrected?
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The employer should exclude managers and supervisors from all tip pools and stop requiring contributions from employees who receive no tips. It must decide whether to include kitchen staff; if it does, it must pay the full minimum wage and stop taking the tip credit. It should keep accurate records of hours worked, tips received, pool contributions, and pool distributions. All pre-shift and side work must be compensated. The employer should post required tip-credit notices, train Marco not to take pool money, and repay affected employees. Because the pool records are missing, the employer should reconstruct distributions from POS and payroll data and consider self-reporting to the U.S. Department of Labor to limit liquidated damages.