Know the Labor Rules for Restaurants
The Fair Labor Standards Act (FLSA) and Texas labor laws both set standards for how employers compensate and treat employees. Companies must pay non-exempt employees a minimum hourly wage, overtime rates, and more. However, if you own a restaurant or a hospitality establishment that employs tipped workers, the rules can be a bit different. It is important to understand these laws to prevent employee complaints, liability, and civil penalties.
Compensating Tipped Employees
Many types of employees earn tips, which are voluntary payments customers make in addition to their bill. Mandatory service charges by a company are not considered to be tips. The following are some tip basics for Texas employers:
- Tips belong to the employee, not the employer
- Tips can count as a credit toward minimum wage
- Tip pooling is allowed
Tip Credits
The current minimum wage in Texas is $7.25 per hour. However, if you have tipped employees, the minimum hourly wage you must pay is $2.13 per hour, as long as their tips make up enough to cover the full $7.25 per hour. If an employee does not make enough tips to make up the full minimum wage, you must compensate them enough to ensure they are receiving at least $7.25 per hour worked.
Tip Pooling
Many employees may receive tips in your company. You can require them to “pool” a portion of their tips to divide among a group of employees. However, you must notify them of the tip pool, and you must ensure that employees never have to pool an amount that would put them below the minimum wage. Finally, the tip pool cannot go to any non-tipped employees, managers, or owners.
Consult with a Houston Business Lawyer Today
Houston has its fair share of restaurants, hotels, bars, and other establishments. If you employ tipped employees, you should discuss your policies with a business attorney in Houston. Call attorney Tim Sutherland at 713.300.1946 or contact us online today.