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Servers and bartenders won an important battle in their war on earning a living wage. An 11-member en banc panel of the Ninth U.S. Circuit Court of Appeals ruled that tip credits cannot be used when a server or bartender is performing non-tip credit tasks, so long as at least 20 percent of the employees tasks are non-tip credit related.
An Example: John the Bartender
This sounds confusing -- not surprisingly since it's jargon created by government agencies and lawyers. An example might add clarity:
Let's say John is a bartender. When bartending, John collects tips in the form of tip credits. John's employer is allowed to offset wages by the tips earned, down to as low as $2.13 per hour, so long as the tips and wage combined are at least minimum wage. Now let's say John spends 20% of his day prepping the bar with cut fruit and clean glasses. And John spends 10% of his time cleaning bathrooms. John doesn't earn tips during that time, and, according to this ruling, John must be paid at full wage, or at least full minimum wage, for those hours worked, and not at the lower rate earned when tips are offsetting his wages.
Public Policy Reasons for the Decision
Judge Richard Paez, writing for the majority, stated there are two public policy reasons for this decision. First, customers give tips as "a gift to the server, as opposed to a cost-saving benefit to the employer." If John serves a great drink, why should P.F. Chang's corporate office and shareholders benefit? Only John should. Second, if an employer could pay a bartender $2.13 per hour to clean toilets, there would be no need to hire janitors at $15 per hour. Taken to the extreme, ruling any other way would eventually make no economic sense for John, and may put janitorial services out of business.
If you feel like your employer is unfairly paying you lower wages, erroneously claiming that tips make up the difference, contact an employment attorney that specializes in representing labor employees. An attorney will likely take your case without any upfront payment, and only charge you for a portion of the money recovered from your employer.