Question

Misty Cumbie worked as a waitress at the Vita Café in Portland, Oregon. The café was owned and operated by Woody Woo, Inc. Woody Woo paid its servers an hourly wage that was higher than the state’s minimum wage (which was higher than the federal minimum wage), but the servers were required to contribute their tips to a "tip pool." Approximately one-third of the tip-pool funds went to the servers, and the rest was distributed to kitchen staff members, who otherwise are not considered tipped employees. Misty sued the employer and alleged that the tip-pooling arrangement violated the minimum wage provisions of the Fair Labor Standards Act. Does it? Explain.
1. The Fair Labor Standards Act is involved in this case, because the case involved questions about the: minimum wage,
maximum hours.
2. The minimum wage can be changed by: Congress, the Department of Labor, the Fair Labor Standards Board
3. States: are, are not allowed to establish a: higher, lower wage than the federal minimum wage.
4. If a state minimum wage is higher than the federal minimum wage, an employee must receive: the state minimum wage,
the federal minimum wage
5. The government can establish a lower minimum wage for employees who make tips, but all employees are: entitled,not entitled to receive at least the minimum wage.
6. If an employee who makes tips earns less than the minimum wage, the employer: is, is not required to make up the difference so that the employee makes at least minimum wage.
7. In this case, the servers earned a wage: higher, the same as, lower than the state minimum wage, which was: higher,
the same as, lower than the federal minimum wage.
8. If the servers donate all of their tips to the "tip pool" and don’t receive any back, they: do, do not earn at least the minimum wage.
9. If the servers donate all of their tips to the "tip pool" and receive a portion of those back, they earn: more than, the same as, less than the minimum wage.
10. In this case, the court likely will find for: Woody Woo, Inc., Misty Cumbie, kitchen staff members
11. WHAT IF THE FACTS WERE DIFFERENT?
Assume Woody Woo decided to pay its servers and kitchen staff the legal minimum wage for a tipped employee (which is less than the required state minimum wage) plus tips received from the tip-pool funds. Under the Fair Labor Standards Act, employers can require employees to pool their tips for "redistribution" among tipped employees to ensure that all tipped employees make at least the minimum wage and are treated fairly.
If Woody Woo, Inc. pays the lower salary plus tips and then creates a tip pool where the servers’ tips are split among the servers and kitchen staff, this: does not violate, violates the FLSA.
12. With these facts, the court most likely would find for: Woody Woo, Inc., Misty Cumbie, kitchen staff members

Answer 1

To add on...here is a good article concerning Restaurant Tip Pooling + Tip Sharing Best Practices & Laws by state:

https://medium.com/@hello_5766/the-new-tip-pooling-laws-for-restaurants-what-you-need-to-know-in-2018-fec8e898b522

(Note: If you are using Excel (or Pen & Paper) for Restaurant Tips Distribution, check out https://tipmetric.com/ to learn how to automate the process, eliminate mistakes & save time processing payroll)