In a recent investigation from Las Vegas, the Department of Labor Wage and Hour Division determined that nearly 500 drivers of one Vegas limousine company had improper payroll deductions and tip credits.  These deductions left many chauffeurs with earnings below the minimum wage.

The employer, Executive Las Vegas, will pay a total of $232,317 to 479 employees for violating minimum wage regulations after the division's Las Vegas District Office determined the limousine and shuttle bus employer had made payroll deductions for vehicle repairs, uniforms, drug tests, fuel, name badges, cash shortages and water cups. Doing so caused the earnings of hundreds of commission-based drivers to fall below the minimum wage. 

Executive Las Vegas also applied an incorrect formula to determine whether employees received enough in tips to support the credit the company claimed against its obligation to pay the minimum wage. As a result, some employees were not paid at least the minimum wage in some workweeks. Finally, the company automatically deducted an hour for lunch whether an employee took a break or not, which resulted in underreporting of actual hours worked. 

The Fair Labor Standards Act requires that covered employers pay nonexempt employees at least the federal minimum wage of $7.25 for all hours worked, and time and one-half the regular rate of pay for hours in excess of 40 in a workweek. Employers also are required to maintain accurate time and payroll records. 

Under the FLSA, tips are the property of the employee who receives them; however, employers of tipped employees can benefit by claiming a credit based on the tips toward their obligation to pay those employees the full minimum wage. If an employee's tips combined with the employer's direct wages do not equal the minimum wage, the employer must make up the difference during the pay period. An employer that claims a tip credit is required to pay a tipped employee only $2.13 an hour in direct wages, provided that amount plus the tips received equals at least the federal minimum wage of $7.25 an hour.