Wage Model Virtual Education Session Follow-up October 30,2020

Earlier this week we held a Colorado Restaurant & Bar Show virtual education series session on wage model considerations. Our Legal Resource Center partner Todd Fredrickson, labor law attorney at Fisher & Phillips, covered tip pools, wage models, and new changes under the COMPS #36 order. We've compiled the highlights from that session below. You can view the full session here.

  • If you are considering a pay model where your regularly tipped employees are required to pool their tips or participate in a mandatory tip-out among themselves, you may continue to employ a tip credit towards these employee’s hourly wage. Managers, supervisors, and owners may never participate in a tip pool or tip-out. 
  • A regularly tipped employee is one that customarily and regularly has face to face interaction with patrons and receives $30.00 or more per month in tips.
  • For non-regularly tipped employees to participate in a tip pool or tip-out with regularly tipped employees, you must bring the entire staff participating in the tip pool/tip-out up to the full minimum wage or more. When you include non-regularly tipped employees in a tip pool/tip-out of any kind you are no longer able to take a tip credit towards the hourly wages of those participating in the pool.
  • If tips are shared with non-regularly tipped employees, you need to make patrons aware. You can choose to employ a table tent, a line at the bottom of menus, or a line on payment receipts. How you wish to word the disclosure is entirely up to you as long as it says that your business shares tips with all employees. We have seen some places with language such as “We share tips with all employees who helped create your dining experience”, but you can use whatever works best for your business.
  • Regardless of your tip pool model, you need to have all employees participating in the pool review and sign a tip share agreement. Our legal resource partners at Fisher and Phillips have provided a template for you here
One of the most frequently asked questions is what makes a “supervisor”. Fisher and Phillips have provided you with a “yes or no” quiz to determine who is a supervisor here

Todd also reviewed the rest and lunch break laws under the COMPS #36. Here’s what you need to know:
  • Employees are entitled to an uncompensated, uninterrupted, and “duty free” meal period of at least 30 minutes when the shift exceeds five consecutive hours. Ideally, these meal breaks should fall between one hour after the start, and one hour before the end, of the shift to provide the employee adequate rest. To qualify as a “duty free”, uncompensated meal break, the employee must be relieved of all job-related responsibilities and permitted to pursue personal activities, uninterrupted, for the full 30 minutes. Note: If an employee’s meal break is interrupted or they asked to perform work before reaching 30 minutes, the employer is required to pay the employee for all 30 minutes of their break.
  • Employees are entitled to a compensated 10-minute rest break for every four hours of work. The breaks shall be 10 consecutive minutes unless on a given workday, or in writing covering up to a one-year period that is signed by both parties, the employee and employer agree voluntarily, and without coercion, to have two 5-minute breaks. For this to be acceptable, the 5-minute break must allow the employee enough time to go back and forth to the restroom or other location where the break will be taken. Ideally, to the extent practical, the rest breaks shall be in the middle of each four hour work period. Because employees are entitled to fully compensated breaks, if they are denied a full 10-minute break for every four hours of work, their shift is effectively extended by 10 minutes. Therefore, a failure by an employer to allow a full rest break is a failure to pay 10 minutes of wages at the employee’s agreed upon or legally required rate of pay. An employee may be entitled to more rest breaks for more hours worked. The breakdown is as follows:

Work Hours                  Rest Periods Required 
2 or fewer                    0
Over 2, up to 6             1
Over 6, up to 10           2
Over 10, up to 14         3
Over 14, up to 18         4
Over 18, up to 22         5
Over 22                       6

You should have your employees signing off and acknowledging that they understand the meal and rest break policy and have received all meal and rest breaks they are entitled to. Fisher and Phillips have provided a template here.

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