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WHAT IS A TIP CREDIT AND WHO IS ENTITLED TO IT?

Generally, under the provisions of the Fair Labor Standards Act (“FLSA”), employees in the United States are required to be paid at, or above, the minimum wage. The FLSA sets the national minimum wage at $7.25 per hour, but states can set their minimum wage at a higher rate. In Florida, the minimum wage is $8.25 per hour, however there are exceptions to the minimum wage requirement. One such exception to that rule is for employees who customarily and regularly receive more than $30 a week in tips.1 For those employees, their employers can take a tip credit against the minimum wage. In Florida, the maximum allowable tip credit is $3.02 per hour. The application of a tip credit can make a huge difference for employers. One recent study shows that in 2016 there were over 2.6 million waiters and waitresses, alone, in this country whose employers may be entitled to take a tip credit. That number is projected to increase to over 2.9 million by 2026.2

It is important for employers to understand their obligations regarding tipped employees, and it is equally important for employees to understand their rights. Beyond the initial threshold of $30 per week in tips, employers must follow the following guidelines and must provide the following information to tipped-employees:

1) The amount of cash wage the employer is paying a tipped employee, which must be at least $5.23 per hour3;

2) the additional amount claimed by the employer as a tip credit, which cannot exceed $3.02 (the difference between the minimum required cash wage of $5.23 and the current minimum wage of $8.25)4;

3) that the tip credit claimed by the employer cannot exceed the amount of tips actually received by the tipped employee;

4) that all tips received by the tipped employee are to be retained by the employee except for a valid tip pooling arrangement limited to employees who customarily and regularly receive tips; and

5) that the tip credit will not apply to any tipped employee unless the employee has been informed of these tip credit provisions.

If an employer fails to meet these guidelines they will be unable to claim the tip credit and would owe the employee at least the full minimum wage.

However, even if an employer claims a tip credit they’re not excused from paying the employee for overtime. Just as any other non-exempt employee, a tipped employee is obligated to be paid one and one-half times the regular rate at which he is employed for each hour worked above 40 hours per week.5 In calculating the tip credit for an overtime wages, the one and a half times rate is multiplied by the initial minimum wage, then the tip credit is applied to the overtime rate.6 For example if it tipped employee in Florida works 50 hours a week the first 40 hours are paid at the credited rate of $5.23 an hour, the next 10 hours are calculated by multiplying the minimum age of $8.25 an hour by 1.5 resulting in a rate in an overtime rate of $12.38 an hour. The $3.03 tip credit is then subtracted from the overtime rate, resulting in a rate of $9.36 an overtime hour for the tipped employee.

However, the reality of today’s work environment is that employees often wear more than one hat. The same waiter who earns tips, may also work as a host who does not receive tips. An employer is only able to receive a tip credit for the time that the employee works in a tipped job. In the situation described above, the employer would be able to take a tip credit for the time that the employee worked as a waiter, but for the time that he was working as a host he would have to be paid at least the full minimum wage. In other words, if an employee split her time equally between tipped work and non-tipped work, then the employer would be able to claim a tip credit for 50% of the time that she worked and for the other 50% the employer would have to pay at least the full minimum wage. There is, however, one slight exception, “[t]he FLSA permits an employer to take the tip credit for some time that the tipped employee spends in duties related to the tipped occupation, even though such duties are not by themselves directed toward producing tips. For example, a waitperson who spends some time cleaning and setting tables, making coffee, and occasionally washing dishes or glasses is considered to be engaged in a tipped occupation even though these duties are not tip producing. However, where a tipped employee spends a substantial amount of time (in excess of 20 percent in the workweek) performing related duties, no tip credit may be taken for the time spent in such duties.”7

The application of the tip credit under the FLSA, can be a complicated matter depending on the circumstances of employment. Regardless of whether an employer takes a tip credit, a tip is the sole property of the tipped employee and cannot go to the employer.8 Ultimately, the employer is responsible for making sure that the employee is paid at least minimum wage. If the tipped employees’ actual hourly wage (including tips they receive) does not equal the minimum wage, then the employer must make up the difference.

If you are an employee in Broward, Palm Beach or Miami-Dade Counties and feel that you have not been paid the wages that you are owed under the FLSA, or if you are an employer who has been accused of paying an employee below the minimum wage or just want to be sure that you are in compliance, the Law Office of Brandon J. Gibson, PLLC is here to help. Contact us today to schedule a consultation. We will hear the details of your case and help determine what options you have under the FLSA and Florida minimum wage laws.

Brandon

www.bjglawfirm.com

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53 Years After Title VII, Still No Clear Answer on Sexual Orientation

Title VII of the Civil Rights Act of 1964, makes it illegal for an employer to “fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s race, color, religion, sex, or national origin.” However, the question of whether Title VII’s protection against discrimination in the workplace extends to sexual orientation has arisen. This issue has been addressed for several years in different forums, but it has come to the forefront of the mainstream media as the Department of Justice (DOJ) has recently weighed in on the issue. In a brief filed in the case of a skydiving instructor who alleged that his premature termination was related to his sexual orientation, the DOJ argued that Title VII does not and should not provide protection against discrimination based on sexual orientation.

The U.S. Equal Employment Opportunity Commission (EEOC), the organization responsible for enforcing federal laws that make it illegal to discriminate against a job applicant or an employee, has taken the position that discrimination based on sexual orientation is prohibited under Title VII. Despite the EEOC’s guidance, the answer to the question of whether Title VII applies is not clear-cut. This issue has been litigated in multiple courts, with different results, that have resulted in a split of the judicial circuits. For example, the Seventh Circuit Court of Appeals has held that Title VII recognizes claims based on sexual orientation discrimination, while the Second and Eleventh Judicial Circuits have held that Title VII did not apply to discrimination based on sexual orientation. Accordingly, the determination of the applicability of Title VII to sexual orientation depends on what part of the country, and within which judicial circuit an individual lives. This judicial split will likely lead to a case being brought before the U.S. Supreme Court to provide a definitive ruling which will unify the courts one way or another.

Florida falls within the Eleventh Judicial Circuit, so at the moment, the binding law is that Title VII does not protect against discrimination based on sexual orientation. The Florida Civil Rights Act (FCRA), the purpose of which is “to secure for all individuals within the state freedom from discrimination because of race, color, religion, sex, pregnancy, national origin, age, handicap, or marital status and thereby to protect their interest in personal dignity, to make available to the state their full productive capacities, to secure the state against domestic strife and unrest, to preserve the public safety, health, and general welfare, and to promote the interests, rights, and privileges of individuals within the state,” is the state law equivalent to Title VII. Like Title VII courts have held that the FCRA does not apply to sexual orientation. However, even though Title VII and the FCRA may not apply to discrimination based on sexual orientation there are some legal protections available. Many counties and cities within the state have enacted laws which recognize sexual orientation as a protected class and provide protection against workplace discrimination.

If you are in the Broward, Palm Beach or Miami-Dade Counties and feel that you have been discriminated against at work for any reason, the Law Office of Brandon J. Gibson, PLLC is here to help. Contact us today to schedule a consultation. We will hear the details of your claim, determine what options you have under applicable laws, and help you pursue your case.

Brandon

www.bjglawfirm.com

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Workplace Nightmare

Ideally each of us would wake up every day and enjoy going to work. We would long for the camaraderie of our co-workers and be encouraged by the support of our supervisors. Unfortunately, many people work in, or have worked in, an unpleasant environment. From irritating co-workers and overly demanding supervisors who appear to be nitpicking and trying to manage you out, to “locker-room” type environments where you may but subjected to crass language and teasing, the behavior of those around us greatly affects our jobs. Often these outside occurrences amount to mere annoyances or inconveniences but sometimes they can become so pervasive that you don’t know what you are going to do; you just want to throw up your hands and quit. So what are your options?

Before we talk about legal options, the most important thing to remember is that your decision impacts your life and the lives of those around you. The reality is that most of us have responsibilities, be it family, a mortgage, car note or any of the multitude of bills that comes with adulthood. Unless you have money saved to meet your obligations it may not make sense to simply resign out of frustration until you have another job lined up. Additionally in Florida, as in other states, you may not be eligible for unemployment benefits if you voluntarily resign from your job. (more…)

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Florida’s minimum wage has increased to $8.10 per hour

During and following the latest election cycle there has been a lot of talk about lowering and raising the minimum wage. So, what exactly is the current minimum wage?

The Fair Labor Standards Act (“FLSA”), which was created by Congress to address actions by employers that were “detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers” , has established, with some exceptions, a federal minimum wage of $7.25. However, the FLSA “provides minimum standards that may be exceeded, but cannot be waived or reduced. Employers must comply, for example, with any Federal, State or municipal laws, regulations or ordinances establishing a higher minimum wage.” (more…)

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Welcome to the Law Office of Brandon J. Gibson, PLLC

Welcome to the first blog entry for the Law Office of Brandon J. Gibson!!!  In this space, I will try to provide information that is relevant and useful to clients, potential clients and anyone else who visits.

I will primarily post about legal issues and how they affect you, but I may also address some current events and things that are making an impact in the South Florida Community.  If you have any general questions or comments, please feel free to leave them and I will respond on the blog, or directly if so warranted.  Keep in mind that any comments on this blog will be displayed publicly and are not protected by attorney-client privilege. (more…)

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