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MA Federal Court Judge Allowed Wait Staff FLSA Claim to Sue Employer over “Tip Credit”

Published:  April 12, 2017

A judge from the federal court in Massachusetts ruled that wait staff could sue their employer under the federal Fair Labor Standards Act (FLSA) and the Massachusetts Wage Act for applying the $2.63 per hour wage normally reserved for tipped work to non-service-related work performed.

Under FLSA, employers can apply the lower minimum wage known as the “tip credit” to services performed by employees that generate tips.  In the case where an employee has “dual jobs”, performing both tip generating tasks and work that is not related to the tipped duties, the employer is barred from applying the “tip credit” to work performed that is not related to the employee’s tipped duties.

The U.S. Department of Labor’s field operating handbook stipulates that employers also cannot apply “tip credit” to tasks that do not generate tips but are “related” to the tipped work, if the tasks exceed 20 percent of the employee’s time.

While the appeals courts in Massachusetts have yet to address the “dual jobs” issue, the judge stipulated that he had no reason to believe that Massachusetts state law would be interpreted any differently than its federal counterpart.

The judge further stated that the issue of deference to the U.S. Department of Labor’s field operating handbook’s “20 percent rule” need not be reached based on the plaintiff’s sound FLSA claim that the employer violated the statute by requiring his employees to perform non-tipped tasks not related to the tipped work at less than minimum wage.

Employers will want to closely track the employees’ time allotted between tipped work and non-tipped tasks. Employers also need to be wary that it may become a requirement to pay employees the regular minimum wage if they require them to spend more than 20 percent of their time on tasks that do not generate tips but are related to the tipped work.

If you have any questions about the Fair Labor Standards Act or the Massachusetts Wage Act, please contact any of the attorneys at Royal, P.C.