Reality show debacle spurs questions about tipped employees

May 21, 2013

Tuesday, a scandal-plagued restaurant in Scottsdale is set to reopen. The case has generated social media buzz, but it has also raised important legal questions about employees who receive tips. 

NICK BLUMBERG: Amy’s Baking Company shot to infamy after appearing on the FOX reality show “Kitchen Nightmares.” Here is host Gordon Ramsay asking a waitress about the money she makes on the job.


WAITRESS: I don’t make tips.

RAMSAY: Say that again?

WAITRESS: I make hourly.

RAMSAY: Serious? You must be the only server in this country --


RAMSAY: -- that doesn’t get tipped out. So where do the tips go?

WAITRESS: The owner.

BLUMBERG: In Arizona, minimum wage for waiters is $4.80 an hour, as long as they make at least $3 an hour in tips. The owner has since said publicly that employees were paid an hourly wage, between $8 and $14 an hour, but it is not clear whether employer set up a tip pool to be shared or whether the owner only paid his employees hourly and kept the tips.

MATT FENDON: Yeah, it’s very unusual.

BLUMBERG: Matt Fendon is an employment attorney in Phoenix. He does not think an employer keeping tips and paying a hourly wage would be illegal under Arizona law, but federal law specifically says tips are always the property of an employee.

FENDON: You could have federal law contradicting state law, and in that situation, the federal law would trump.

BLUMBERG: Tens of thousands of people have signed an online petition asking federal and state agencies to investigate Amy’s Baking Company for breaking the law. In a statement, the owners say they are praying for an understanding and a comeback.

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