Is this minimum wage fraud

Question

My daughter works at a buffet style restaurant. She is a cashier/salad bar stocker. She is paid the minimum wage but as of 7/24/2008 her employer has informed them that they will not be going up to $6.55 the FEDERAL MINIMUM WAGE but the waitress on the floor will give them $10 a night and she will have to claim as tips even though she does not wait tables. She does help the waitress/waiters out sometimes by getting refills for the customers but in no way truly waits on the tables like they do. I think this sounds hanky and the employer is trying to defraud the government and my daughter her pay. Any insight would be great and/or emails or contact numbers to reports this to the right authorities. Thanks

Answer 1

i work at applebees

i make 4.30 an hour plus tips which is lik 10 bucks a night

have no idea if its legal or not

but if it wasnt idk what i would do though lol

Answer 2

NO THE EMPLOYER IS CORRECT. YOUR DAUGHTER CAN GET BETTER JOBS OUT THERE, SUCH AS AT TARGET WHICH STARTS PAY AT $7.00/ .

Covered nonexempt workers are entitled to a minimum wage of not less than $5.85 per hour effective July 24, 2007; $6.55 per hour effective July 24, 2008; and $7.25 per hour effective July 24, 2009. Overtime pay at a rate not less than one and one-half times the regular rate of pay is required after 40 hours of work in a workweek.

    * FLSA Minimum Wage: The federal minimum wage is $5.85 per hour effective July 24, 2007; $6.55 per hour effective July 24, 2008; and $7.25 per hour effective July 24, 2009. Many states also have minimum wage laws. In cases where an employee is subject to both state and federal minimum wage laws, the employee is entitled to the higher minimum wage.

    * FLSA Overtime: Covered nonexempt employees must receive overtime pay for hours worked over 40 per workweek (any fixed and regularly recurring period of 168 hours — seven consecutive 24-hour periods) at a rate not less than one and one-half times the regular rate of pay. There is no limit on the number of hours employees 16 years or older may work in any workweek. The FLSA does not require overtime pay for work on weekends, holidays, or regular days of rest, unless overtime is worked on such days.

    

Answer 3

That does sound fishy.  They can probably get away with that saying she is a "tipped employee" (the $10 she's getting from the wait staff who probably aren't very happy about having to tip them so that their employer doesn't have to pay them min. wage!)

I would look online at the Department of Labor website.  It might have a "Contact Us" link in which you can e-mail them this same question.

Answer 4

     The gist of minimum wage law is that an employer must compensate their employees a minimum pre-withholding total of $6.55 per hour, either via straight wages or via wages plus claimed tips. As long as your daughter is receiving at least that rate of compensation, she may not have an exceptionally strong case for being defrauded in terms of her rate of pay. HOWEVER, there are some requirements regarding which employees an employer can choose to compensate in this way--in other words, you're right about this situation sounding hanky. Here’s why:

“An employer may pay a tipped employee not less than $2.13 an hour in direct wages if that amount plus the tips received equal at least the federal minimum wage, the employee retains all tips and the employee customarily and regularly receives more than $30 a month in tips. If an employee's tips combined with the employer's direct wages of at least $2.13 an hour do not equal the federal minimum hourly wage, the employer must make up the difference.” (Source: U.S. Department of Labor, Employment Standards Administration website)

     In other words, because she does not retain all of “her own” tips but instead a set amount, and because (I’m assuming) she has not customarily received $30 or more per month in tips until now, it’s possible that her position should not be compensated in this manner at all. This is definitely something I would bring up to the authorities.

     Here is another reason why this situation is rotten: It sounds to me like your daughter's employer does not want to increase the straight wages for her position and is therefore essentially stealing $10 per night from the waitress to pay for the legally required increase. In my observation, buffet waitresses receive very poor tips to begin with and it is likely that, with a $10 per night cut in tips, the waitress may now be receiving far less than the minimum wage in her own compensation. (Even if she is still receiving the minimum pay she has probably noticed a significant drop in her earnings.) If this is the case, she definitely has grounds for demanding a respective increase in wages. (And, if this is denied, she should file a claim!) Also, since she no longer retains all of her own tips, her position may no longer be eligible for wages + tips compensation and, if that is the case, she should be paid at least the full $6.55 per hour by her employer in straight wages. This may end up becoming much more expensive for the employer than simply increasing his non-tipped employees’ wages!

     The first thing I would do is to consult your local WHD office (Wage and Hour Division, US Department of Labor) and explain the situation to them. Here is a link to their contact information:

http://www.dol.gov/esa/whd/america2.htm

     I would also suggest that you or your daughter speak with the waitress about this situation, preferably not during their work shifts or on the premises of the restaurant. While the actual amount of the waitress’s compensation is not your business (and you should make this clear upfront), you should express your concern that she may not be receiving the pay she is entitled to and give her the WHD contact information so that she knows she has options.

     You may also want to tell your daughter is to request a copy of this new compensation plan and/or job descriptions in writing either on company letterhead or with the manager's signature on it and make sure to record the date of this request. I would ask the advice of the WHD representative first before making this request though.

     Last of all, I would like to state for the record that I am not employed by the US Department of Labor and I am not formally qualified to give legal advice. This is entirely based on my own experiences and my understanding and interpretation of the WHD online materials. Please, please speak with a local WHD representative first before you take any actions.

     Good luck with everything! I hope this will be a valuable learning experience for your daughter. As Cyndee commented, it is entirely possible that she may receive some form retaliation for whistle blowing. If so, tell her not to worry. The experience is far more valuable than losing an entry level job and it is unlikely that that would hurt her significantly in the long run. Besides, as a rule, young entry-level employees receive far greater increases in pay by moving on to new jobs than they do by getting a raise in their current one. I should know - I make twice as much money now than I did three years ago in my first "real" job!

Answer 5

Why don't you contact the Labor Board for your state and ask them?

If the employer is committing any fraud they will take action immediately and put a stop to the fraud. Further, your daughter will be paid the wages due her.

Oh, it is possible she will be let go for some unknown reasons because you are a whistle blower. But.. this is an entry level job, do not worry about that. It will not harm her for life. Instead, it will teach her about right and wrong and justice. Report the cheating employer if that is what is really happening.  

Answer 6

You would have to talk to the manager with your daughter, and find out the truth.  If they do not comply you are within means to quit and claim employee insurance.

Answer 7

i've heard of this before but i dont know if it is legal..it sure limits the amount of money she can make..

Answer 8

Tipouts, also called tip sharing, is a very common practice, is not illegal, and does make someone a tipped employee.  And federal minimum wage for tipped employees is 2.13 an hour, not the $6.55 that it is for non-tipped employees.

As long as her total equals at least the minimum wage, and her total before tips is at least the tipped minimum wage, then it's legal.  There are a few states that have their own rules for minimum wage, and even one or two that don't allow tips to be included, but since you refer in your question to the federal minimum, I am assuming you don't live in one of the states with stricter minimums than the federal law.