Supreme Court Refuses “Tip Credit” Appeal
Got employees who earn tips? Read this …
The U.S. Supreme Court yesterday rejected an appeal from Applebee’s in a dispute over compensation due tipped employees.
More than 5,000 bartenders and servers sued Applebee’s, claiming they were underpaid. The claims center on “tip credits,” a practice in which restaurants and other establishments pay employees reduced minimum wage by factoring in tips received by the employees.
Tip credits are banned in some states (e.g., California and Minnesota) but are generally permitted elsewhere.
The plaintiffs allege that because they spent more than 20% of their time performing duties such as opening, closing, prepping and cleaning, they should be paid full minimum wage for hours worked without tips. Applebee’s contends that all such work is part of the employees’ tip-earning duties.
Applebee’s appealed to the Supreme Court in hopes of overturning a lower court ruling refusing to dismiss the case and allowing it to proceed to trial in September.
Stay tuned for more.