Tip Pooling Pay Practicies’ Legality under Tenessee’s New Minimum Wage Rate

Tennessee wage workers’ received what will likely be their final minimum wage increase for a while when the federal minimum wage (including tipped employees’) increased last month to $7.25. Tennessee, having no minimum wage statutes of its own, followed this last of three annual minimum wage increases begun in 2006.

Unfortunately, if history be any indicator, tipped Tennessee employees, such as wait staff and other hospitality workers receiving $30 or more a month in tips, may not see the benefit of this increase, and may end up taking home less than the minimum wage of even three years ago, due to a practice known as tip pooling.

Tip pooling is not in-itself an illegal practice. Though the federal Fair Labor Standards Act (FLSA) states that a tip is the exclusive property of the employee receiving the gratuity, judges have decided, through a series of convoluted court decisions, that tip pooling (requiring tipped employees to pool a portion of their tips together to pay other employees) is legal–as a general practice. What gets many Tennessee service industry proprietors in trouble is when tip pools are used to pay-off underpaid un-tipped employees at the tipped employee’s expense.

If you earn $2.13 as a tipped employee in Tennessee, it is your employer’s duty to make up the difference and ensure that your take-home after tips is at least minimum wage of $7.25 per hour. If your employer has dipped into the tip pool to pay themselves or make gifts to managers or if your Tennessee employer has required you to pay out more than 15% of your tips (especially if your take home becomes lower than TN minimum wage), you may be able to recover to unpaid wages going back three years and have court and attorney costs covered through a wage pooling lawsuits.

To pursue underpaid or unpaid wages from overtime, withheld tips, or other illegal pay practices, contact the Nashville, TN wage and hour attorneys of Higgins Firm. We have to the experience to settle fast and fair Tennessee wage cases throughout the state.

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