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TIP THEFT


The Lyon Firm is actively Filing Unlawful Tip Pooling and Wage Theft Class Action Lawsuits
Nationwide Success

Wage and Hour Lawyer

investigating tip theft & tip pooling claims

Have you experienced tip theft? The only reason employers can offer a low minimum wage to service employees is the potential for a healthy amount of tips. And when employees do not earn at least minimum wage with tips, the law requires that the employer make up the difference.

Labor laws may be overlooked by employers, or they may intentionally engage in tip theft schemes, cheating staff out of hundreds of millions of dollars each year.

There have been numerous claims by service staff that employers are not properly compensating employees, or are engaging in unlawful tip pooling schemes.

Federal labor law is clear: employers may not keep tips received by its employees under any circumstances. Tips are the sole property of the individual employee that earned the tip.

It is illegal for managers or supervisors to keep any portion of employees’ tips, whether or not the employer takes a tip credit.

An employer may be liable for tip theft under the Fair Labor Standards Act if they take any portion of tips from an employee. In the past, legal action has been taken after restaurants paid servers and bartenders a salary but withheld tips. Tip pooling lawsuits have also been filed on behalf of service staff who did not receive their fair share of tips they earned.

What Damages Are Available in a Tip Theft Lawsuit?

In a lawsuit over tip theft, the damages available to the affected employees can include various types of compensation for the tips that were wrongfully withheld or misappropriated.

Here are some common types of damages in such lawsuits:

  • Unpaid Tips: This is the primary form of compensation sought in tip theft cases. It includes the tips that were unlawfully withheld or stolen by the employer or other employees.

  • Double Damages (Liquidated Damages): In some cases, employees may be entitled to liquidated damages, which essentially double the amount of unpaid tips. This is often available as a penalty for willful or intentional violations of wage and hour laws.

  • Interest on Unpaid Tips: Courts may order the payment of interest on the unpaid tips to compensate for the delay in receiving the tips that were wrongfully withheld.

  • Punitive Damages: In cases where the tip theft was particularly egregious and involved willful misconduct, employees may seek punitive damages, intended to punish the employer and deter future violations.

  • Job Reinstatement: If employees were wrongfully terminated for asserting their tip theft claims, the court may order their reinstatement to their previous positions.

The specific damages available will depend on the laws and regulations applicable to the industry and the specific circumstances of the tip theft case.

It’s important to consult with an experienced attorney who specializes in wage and tip theft cases to understand the types of damages that can be pursued in a particular lawsuit and to help the affected employees seek just compensation for their tip theft losses.

What Is Tip Pooling?

Tip pooling is when a portion of the tips from an entire team are collected and redistributed every pay period. The lawful redistribution is guided by tip pooling laws described by the Wage and Hour Division of the Department of Labor. But staff have to agree to enter such a scheme. Calculations for the redistribution of tips can vary, especially in states that pay a full minimum wage to all employees.

With that said, no company can lawfully take a percentage of tips from delivery drivers, waitstaff, or other service employee working for tips. This makes it illegal to share tips with the kitchen, adding a manager to the tip pool, or making servers add to a pool of money for a dishwasher.

Tip Pooling Laws

State labor laws vary widely, but they all aim to protect tipped employees. State and federal minimum wages for tipped employees may differ, and staff are encouraged to educate themselves on their legal rights. Tip pooling may seem like a fair system in some cases, but can take advantage of some service staff.

Individual staff should monitor their own tip totals and measure that against what they are take home at the end of each pay period. It is generous to share tips on occasion, but don’t allow employers to take advantage of you. Even in states where a tip pool is allowed, tip pooling might go a little too far.

When Is Tip Pooling Illegal?

Participation may be limited to a certain class of employees. Tip pooling can be used with employees not in tipped positions but only if an employer is paying full minimum wage to all employees. In almost all cases, restaurant owners, managers, and supervisors should not be part of a tip pool.

The Fair Labor Standards Act does not dictate a specific percentage or amount staff members need to contribute to a tip pool, but it does require employers to inform all team members of the agreed-upon percentage or amount. Tip distribution needs to take place within every pay period, and employers may not use tips for any purpose other than redistributing to the employees that earned them.

What Is the 80/20 Rule?

The 80/20 rule states that a team member is eligible for the tip pool if they are performing duties that support the work of directly making tips, ONLY IF those duties make up 20 percent of their shift.

Can I File a Class Action Tip Pooling Lawsuit?

The Lyon Firm is reviewing class action tip theft cases against restaurants when management dips into gratuities left by customers for delivery drivers or servers. Legal action may be considered when managers take a percentage of the tips from waitstaff, or tips are shared with the kitchen.

Claims can be made when a restaurant operates a tip pool and uses the money to pay employees in a non-tip producing job. Any restaurant that operates a tip pool may not withholds tips for its own use.

What Is Tip Credit Notice?

The Fair Labor Standards Act allows employers to take a tip credit toward the federal minimum wage, meaning they are permitted to pay tipped employees a lower wage than the federal minimum wage.

Employers who claim a tip credit, however, are required to inform employees of the following five important provisions:

  • The exact wage the employer is paying a tipped employee
  • The additional amount claimed by the employer as a tip credit
  • Note that the tip credit claimed by the employer cannot exceed the amount of tips received by a tipped employee
  • All tips received by the tipped employee are to be retained by the employee except for any legal and agreed upon tip pooling arrangement
  • Tip credit systems do not apply to any tipped employee unless the employee has been informed of these tip credit provisions

States without a tip credit system include Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington. Employers in a state without a tip credit must pay all employees at least the standard minimum wage, even if they receive tips. If employees are subject to both federal and state minimum cash wages, employers must pay employees the greater of the two cash wages.

What are Some Examples of Tip Theft Settlements?

Amazon: Amazon agreed to pay over $6 million to settle Federal Trade Commission charges that the company pocketed tips promised to Amazon Flex drivers. Amazon allegedly changed their driver compensation structure in 2016 without informing drivers.

DoorDash: In 2019, the Washington, D.C. Attorney General brought a lawsuit against DoorDash, alleging the company misrepresented that tips from customers through the DoorDash app would be distributed to delivery staff. DoorDash was accused of pocketing money intended for workers. The company agreed to pay $2.5 million to settle the tip theft claims.

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ABOUT THE LYON FIRM

Joseph Lyon has 17 years of experience representing individuals in complex litigation matters. He has represented individuals in every state against many of the largest companies in the world.

The Firm focuses on single-event civil cases and class actions involving corporate neglect & fraud, toxic exposure, product defects & recalls, medical malpractice, and invasion of privacy.

NO COST UNLESS WE WIN

The Firm offers contingency fees, advancing all costs of the litigation, and accepting the full financial risk, allowing our clients full access to the legal system while reducing the financial stress while they focus on their healthcare and financial needs.

Attorney Joe Lyon investigating unpaid overtime claims.
fair labor and justice

Class Action Tip Theft Lawsuits

Without wage theft class actions, large employers and corporate defendants would be able to cause harm over a large group of individuals without any risk of financial penalty.

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Questions: Tip Theft Litigation

Can I sue my employer for tip theft?

Yes, you can file a lawsuit against your employer or co-workers if you believe your tips have been stolen or wrongfully withheld. Consult with an attorney specializing in tip theft cases for guidance.

How do I know if I have been a victim of tip theft?

Signs of tip theft can include not receiving the full amount of tips you earned, forced tip pooling that doesn’t comply with labor laws, or your employer or co-workers taking a share of your tips without proper justification.

Can I still pursue a tip theft claim if I no longer work for the same employer?

Yes, you can still pursue a tip theft claim even if you are no longer employed by the same company, provided you are within the applicable statute of limitations for filing a lawsuit.

Will I face retaliation from my employer for pursuing a tip theft lawsuit?

Retaliation is illegal, and employees are protected from retaliation when asserting their rights in tip theft cases. An attorney can help ensure your legal protection if you face retaliation.