On January 8, 2008, the Department of Labor’s Wage and Hour Division (WHD) posted eleven new opinion letters discussing a variety of wage and hour issues. The WHD, charged with administering the Fair Labor Standards Act (FLSA), periodically issues opinion letters in response to questions submitted by employers. This article discusses opinion letters on (1) eligibility to participate in tipping pools, and (2) an employer’s duty to provide uniforms to a tipped employee who repeatedly damages the uniform while off-duty.

Tip Pools

In the first opinion letter, the WHD found that sushi chefs who cook and serve food to customers can participate in a tipping pool. The employer asked about two kinds of chefs: itamae-sushi chefs and teppanyaki chefs. Itamae-sushi chefs prepare and serve sushi to customers in the bar area. Teppanyaki chefs, on the other hand, prepare meals at a table located at customer tables and serve meals to customers. Servers assist both kinds of chefs by taking orders for meals and drinks, and bussers remove plates and serve water. The sushi chefs participated in a tip pool with servers, bussers, bartenders, and counter persons. All members of the tip pool made at least $30 per month in tips.

A tipped employee is “any employee engaged in an occupation in which he customarily and regularly receives more than $30 a month in tips.” 29 U.S.C. § 203(t).  Employees who “customarily and regularly receive tips” are eligible to participate in a tip pool. See 29 U.S.C. § 203(m). The WHD concluded that the sushi chefs could participate in a tip pool because the sushi chef position was not unlike the position of a counter person, and “[i]t has been [the WHD’s] longstanding position that counter persons who serve customers may participate in tip pools.” The WHD cited to a previous January 25, 1983 opinion letter finding that a waiter chef who brings food orders from the kitchen and cooks it on a hibachi grill in front of customers could participate in a tip pool.

Uniforms

In the second opinion letter, the WHD found that that if an employer supplies a “reasonable and sufficient number” of uniforms and replaces any uniforms that are damaged in the course of work-related duties, the employer has satisfied its obligations under the FLSA. The employer had routinely provided tipped employees with a sufficient number of uniforms made of regular wash-and-wear materials. The uniforms were routinely washed and dried with other personal garments by the employees, and did not require special laundering. The employer provides replacement uniforms at no charge. One employee, however, had damaged multiple uniforms while riding a skateboard on his days off. The employer asked if it could require the employee to pay for his own uniform. 

An employer must be able to show that tipped employees receive at least the applicable minimum wage when wages and tips are combined. See 29 U.S.C. § 203(m). Under 29 C.F.R. § 531.35, “[w]hether in cash or in facilities, ‘wages’ cannot be considered to have been paid by the employer and received by the employee unless they are paid finally and unconditionally or ‘free and clear.’  The wage requirements of the Act will not be met where the employee ‘kicks-back’ directly or indirectly to the employer . . . part of the wage delivered to the employee.” The FLSA further requires that expenses that are “primarily for the benefit of the employer” cannot be counted as wages and thus must be paid by the employer (or reimbursed) if failure to do so would bring the employee’s wages below minimum wage in any week. See 29 U.S.C. § 206(a)(1); 29 U.S.C. § 203(m); 29 C.F.R. § 531.3(d). Uniforms required by the employer to be worn while on duty are considered to be for the benefit or convenience of the employer. Employees may not be required to pay for such items if, by so doing, their wages would be reduced below the required minimum wage or overtime compensation. This is true even if an economic loss suffered by the employer is due to the employee’s work-related negligence. Employers may not avoid FLSA minimum wage and overtime pay requirements by having the employee reimburse the employer in cash for the cost of such items because the effect is the same as deducting the cost from the employee’s wages. See 29 C.F.R. §§ 531.3(d), 531.32(c), 531.35.

The WHD found that the employer did not have to continue to provide uniforms to the employee who damaged the uniform on non-work days: “[a]n employer’s obligations under the FLSA are not unlimited . . . [i]f an employer supplies a reasonable and sufficient number of wash and wear uniforms and replaces any uniforms that are damaged in the course of work-related duties, the employer has satisfied its duty to pay expenses that are primarily for the benefit of the employer.” The WHD analogized this situation to a scenario where an employee was using clothes for personal use, and found that the FLSA was inapplicable to that scenario: “[t]he FLSA does not compel the employer to supply its employees with clothing for personal use.”