Philadelphia Wage & Hour Dispute Lawyers

Improper Calculation of Overtime

Sometimes, employers improperly calculate overtime pay due their employees.  For example, this might happen where the employee is paid a flat rate (i.e., a salary, piece rate, or a day rate) and the employer fails to properly calculate the employee’s “regular rate of pay” for purposes of calculating overtime pay.  The U.S. Department of Labor’s Wage and Hour Division has issued extensive rules concerning the regular rate calculation.  For example, if a non-exempt employee is paid daily and works more than 40 hours, their regular pay rate is calculated by dividing their day-rate compensation for that week by the number of hours worked. The employee’s overtime pay is then based on the regular rate calculation.  Employers often are not in compliance with this rule.

Off-the-Clock Work

Sometimes, employees perform overtime work, but the employer does not keep track of (and pay for) this time.  This may happen when a construction worker must show up to the employer’s yard to load tools and equipment in a truck but is not paid until the employee reaches the day’s construction site.  Or, sometimes, an employee is required to wear Personal Protective Equipment (PPE) to do their job but is not paid for the time to “don” or “doff” the PPE.  Further still, an employee might have time deducted for a “lunch break” but still be required to perform productive activities for the employer.  The Department of Labor even requires that any rest breaks (even if no work is performed) must be paid for if they are 20 minutes or less in duration.  Any of these scenarios, and a myriad of others, could result in a claim for unpaid overtime against the employer.

Restaurant & Service Workers 

Under both federal and state law, waiters, bartenders, cocktail servers, bussers, runners, and other service workers generally must receive the applicable minimum wage for each hour worked and must receive overtime compensation (time-and-a-half) for each hour worked over forty (40) hours in a workweek.

Tipped Minimum Wage

In the service industry, employers are permitted to pay their service employees a lower “tipped minimum wage” and take a “credit” for the tips their employees receive, as long as the employee’s tips make up the difference between the hourly wage paid and the applicable full minimum wage, for each hour worked in a workweek.

For example, in the District of Columbia, the minimum wage is currently $17.00 per hour, and the tipped minimum wage is $6.00 per hour. So, while it is permissible for a restaurant industry employer to pay its service staff the lower tipped minimum wage of $8.00 per hour, for the employer to comply with the D.C. Minimum Wage Revisions Act, the employee must also receive tips equal to at least $9.00 per hour.  Otherwise, the employer must pay the difference.

In New Jersey, the tipped minimum wage is currently $5.26 per hour.  The same is in D.C.; the employee’s tips must make up the difference between the tipped minimum wage paid and the full New Jersey minimum wage. 

Tip Credit

However, to take a “tip credit” towards it minimum wage obligations to its employees, a restaurant industry employer must provide specific notices to its employees regarding the tip credit.  In the District of Columbia, for example, employers must provide their employees with written notice of their pay rate, the employer’s use of a “tip credit,” and the terms of a valid tip-pooling or tip-sharing policy (if utilized by the employer). Additionally, employers in D.C. are required to post their tip-sharing policy within their business.  

If employers do not comply with these notice requirements, the employees may have a legal claim for significant amounts of unpaid wages against the employer.

Common Wage & Tip Violations in the Restaurant Industry 

Here are some common wage and tip violations that occur in the restaurant industry:

• The restaurant (or bar) or its managers impermissibly keep or retain a portion of the service workers’ tips. This is not permitted.
• The restaurant pays its servers no hourly wages at all. Even if the service employees receive hundreds of dollars in tips each night, the employer still must pay the applicable tipped minimum wage for each hour worked, regardless of the amount of tips earned. In New York City, the tipped minimum wage is $12.50 per hour.
• A restaurant’s tip-sharing policy requires its service staff to share tips with staff who do not have customer interaction. A waiter or bartender cannot be required to share their tips with line cooks or dishwashers without customer interaction.
• Service employees cannot be paid the tipped minimum wage for all hours worked when not all those hours are spent serving customers. For example, if a service worker spends hours cleaning the restaurant each day, the employee must be paid the full applicable minimum wage for those non-service cleaning hours.