Servers: What You Need to Know About FLSA Tip Credit Damages

 In Overtime Law, Wage Law

Are you a server who has been denied your tips?

The Fair Labor Standards Act (FLSA) requires employers to pay tipped employees at least the federal minimum wage, which is currently $7.25 per hour. However, employers are allowed to take a “tip credit” of up to $5.12 per hour, which means that they can pay tipped employees as little as $2.13 per hour so long as they strictly comply with all requirements for taking a tip credit.

A Server is Entitled to Recover Significant Amounts for Tip Credit Damages

Many servers have a misconception about the amount of tip credit damages they can recover in an FLSA tip credit violation lawsuit as being inconsequential. However, when you dig into the details, it becomes clear that the amount of recoverable damages are often substantial.

tip credit violations

Under the FLSA, employers can take a “tip credit,” allowing them to pay servers less than the federal minimum wage, so long as your employer strictly complies with the requirements of federal wage law. If your employer has violated the tip credit—such as by improperly deducting costs for uniforms, walked tabs, illegal tip pooling, etc.—you’re entitled to recover the full minimum wage for each hour worked.

Here’s how it works: under federal law, the current minimum wage is $7.25 per hour, and the maximum tip credit is $5.12. This means you’re supposed to get at least $2.13 per hour from your employer, with tips making up the rest. However, if your employer has violated the FLSA’s provisions, they are liable to pay you the difference between the full minimum wage and the subminimum wage you received, i.e., $5.12 for each hour worked.

But that’s not all. The FLSA also provides for “liquidated damages” equal to the amount of unpaid wages. This essentially doubles the recoverable amount, meaning that for each hour worked, you could potentially recover $10.24 ($5.12 x 2) under federal law.

Furthermore, you can also recover damages for a period going back two years from the date the lawsuit is filed—and possibly up to three years if the violation was “willful.” So, the potential damages in an FLSA lawsuit can indeed be significant.

In general terms, if your employer has violated the FLSA’s tip credit requirements, you may be entitled to recover the following damages:

  • The difference between the minimum wage and the amount you were paid
  • Liquidated damages, which are a type of penalty that are designed to punish the employer for their violation and to deter them from violating the law in the future
  • Attorney’s fees, which means that you may not have to pay anything out of pocket to hire an attorney to represent you in a lawsuit against your employer

What is a Contingency Fee?

Another common myth that prevents servers from seeking legal help is the perceived cost of hiring a lawyer. The good news? At Herrmann Law, our law firm takes these cases on a “contingency fee basis.”

A contingency fee is a fee arrangement in which an attorney agrees to represent you for free, and only collects a fee if you recover money in your case. Under a contingency fee arrangement, there are no upfront costs to you. If you don’t win, you don’t pay. This setup ensures that all servers, regardless of income, can afford to fight for their rights.

Moreover, under the FLSA, if you win, your employer may be required to pay your attorney’s fees and court costs. This means you can fight for your rights without worrying about financial burdens.

How Can I Get Help from an Experienced Wage and Hour Attorney?workers rights attorneys

If you’re a server facing FLSA tip credit violations, don’t let misconceptions deter you. The potential damages in these cases are far from insignificant, and thanks to contingency fee arrangements, at Herrmann Law, legal representation is within your reach.

Herrmann Law has represented thousands of workers, including workers in the service industry, in collective action lawsuits brought against their employers for FLSA violations. We understand the industry, the intricacies of the FLSA, and the damages to which you may be entitled. Contact us today for a free consultation.

Contact the Employment Attorneys at Herrmann Law

At Herrmann Law, we are committed to assisting employees like you in pursuing justice. If you are a server who has encountered tip theft or other wage and hour violations, it is essential to understand your rights. At Herrmann Law, we are committed to assisting employees like you in pursuing justice. Contact us today to discuss your case and learn how we can help protect your rights. Call us at 817-479-9229 or submit your information online.

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