It’s Not Very Complicated: Restaurant Owners, Managers, and Supervisors Cannot Take Servers’ Tips

The Fair Labor Standards Act (“FLSA”) states that “[a]n employer may not keep tips received by its employees for any purposes, including allowing a manager or supervisors to keep any portion of employees’ tips, regardless of whether or not the employer takes a tip credit.” 29 U.S.C. §203(m)(2)(B). Moreover, a restaurant that violates this rule must: (i) pay each server the total value of any tip credit used by the restaurant (in Pennsylvania, the tip credit amount is usually $4.42 for every hour worked by the server); (ii) reimburse each server for all tips taken by the manager or supervisor; and (iii) pay each server additional “liquidated damages.” See id. at § 216(b).

In a March 17 opinion entitled Whited v. New Cafe at Greystone Gardens, Scranton PA Federal Judge Malachy E. Mannion explained that restaurants cannot escape the above rule by arguing that the manager sharing in the servers’ tips “wears two hats” by also tending bar and waiting on customers. See 2020 U.S. Dist. LEXIS 45715 (M.D. Pa. March 17, 2020). The Judge explained that this holding is consistent with the viewpoint expressed in other federal district court opinions, including Gionfriddo v. Jason Zink, LLC, 769 F. Supp. 2d 880 (D. Md. 2011).

Judge Mannion’s Whited opinion is welcome news for workers in Pennsylvania and beyond. It is illegal for restaurants to require waiters, waitresses, bartenders, and other tipped employees to share tips with restaurant owners, managers, and supervisors. This rule would become meaningless if it carved out every owner, manager, or supervisor who also happens to perform some customers service activities.

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