The FLSA's tip-pooling prohibition made news headlines in March when the restaurant group owned by Chef Mario Batali was reported to have settled an FLSA lawsuit for $5.25 million. Apparently, though, the news headlines did not make its way to Vermont. At least not to the Juniper Hill Inn, anyway. If you watched the premier episode of Gordon Ramsay's new show, Hotel Hell, you already know that Juniper Hill Inn was the project du jour.
The hotel had lots of problems, of course, but the biggest problem was with management. The two co-owners were not exactly "good leaders." And, although I could surely spend an entire post rambling on about the employment-law lessons to be learned from the stars of prime-time reality-dramas, I'll limit myself to just one this time.
During a meeting with Ramsay, the staff confided that the owners "shared" in the tip pool. In other words, staff had to tip the owners at the end of the shift. When Ramsay confronted one of the owners about it, he admitted to having "shared" the staff's tips. He proceeded to explain that he had been so frustrated by the staff's failings that he believed that taking their wages was the only way to get them to improve their performance.
Dear readers, I ask that you humor me for just a moment, as I walk down the road of the obvious. If you regularly belittle your employees, they are not likely to respond positively or work harder to impress you. And if you then make them pay you for treating them badly (even if you call it "tip sharing"), they are almost certainly not going to "aim to please."
I was, I'll admit, fairly surprised that the show's legal team allowed the program to air with the "FLSA confession" segment left in. The statute of limitations is, after all, far from expired. Perhaps the show's happy ending, in which the owners turn their act around and changed their ways for the better will prevent them from getting sued at all. Here's to hoping.
In the meantime, let's take this opportunity to review the tip-pooling rules of the FLSA.
The FLSA permits employers to pay tipped employees a reduced minimum wage. provided they follow certain rules. One of the biggest rules, and the one that's made the news lately, is that tipped employees must keep all of the tips they receive except those that are shared with other tipped employees as part of a tip pool.
Management (and owners) may not share in a tip pool. Thus, absent some fact to which the audience was not made privy, our friends in Vermont, who are, indeed, owners, were prohibited from taking any portion of their staff's tips.
Now, let's tip our hats to our friend, Gordon Ramsay, for giving us another valuable lesson in employment law.
Read more Labor and Employment Law insights from Margaret (Molly) DiBianca in the Delaware Employment Law Blog.
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