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Legal Sea Foods, a seafood restaurant chain based in Boston, is facing two class-action lawsuits over its tipping policies.
Those behind the suits feel that Legal Sea Foods violated Massachusetts' state laws on tipping by allowing those who "rolled silverware in napkins" to share in the tips earmarked for servers and bartenders. These workers are paid less than minimum wage and are entitled to a share of the pooled tips, but with the tip law violated, employees are demanding the regular minimum wage -- $8 an hour, reports the Boston Globe.
How can your business legally deal with tips in light of Legal Sea Foods' potentially perilous predicament?
Each state's minimum wage laws are different, but many states allow for servers to be paid less than minimum wage as long as the sum of their tips and wages reaches that minimum wage. Massachusetts allows tips to be pooled and shared with "wait staff," which refers specifically to those employees who serve food or drink directly to patrons or clear their tables. This definition also excludes anyone who has a managerial role.
Legal Sea Foods is alleged to have been pooling tips for servers and bartenders, but they were also allowing workers who only rolled silverware to collect tips. Workers contend that since the tip-pooling policy violated Massachusetts law, the restaurant chain owes them back wages at the regular $8-per-hour rate. The Globe reports that more than 200 servers and bartenders are represented in these two suits, hoping to recover at least three years' worth of back wages.
Regardless of whether your business is located in a state which allows you to pay workers less than minimum wage as servers or not, you need to be smart about tipping.
As you may have guessed from the two lawsuits facing Legal Sea Foods, any business which allows tip pools may be making itself vulnerable to future litigation. Employers should consider allowing each tippable employee to be responsible for his or her own tips, which may sidestep any tip pool or tip credit kerfuffles.
Of course, each business owner's situation is unique. That's why it's best to speak with an experienced business attorney about your tipping policy before making any big changes.
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