Wise up on your Wage
According to the Restaurant Opportunities Center of NY, “Whether or not you have legal documents to work in this country, you are protected by most Federal and state Labor laws.” Employers who threaten to report employees to I.C.E. are in violation of Federal law and may be prosecuted.
Tip Credit Wage Deductions Your Tips:The Basics Tip Pooling Reporting Tips
Your Server Wage: The Basics
1. The most common and accepted way to pay servers in the U.S. is based on the tip system. Servers earn most of their income from tips received and diners are expected to pay an additional amount of 15- 20 percent for service based on the amount of a meal by leaving a tip. Although the diner is free to leave any amount or nothing at all, it is a common practice and culturally enforced. Most employers are allowed to pay servers a direct special sub minimum wage that is lower than the federal minimum wage.
In other countries and in Europe it is more common for servers to receive an hourly living wage and often they do not expect or receive tips. The federal subminimum cash wage for food servers in the U.S. is $2.13 per hour. States with lower sub minimum wages than the federal ($2.13) include Oklahoma ($2.00), Virginia, and New Jersey ( These states are allowed to take a higher tip credit if they meet certain conditions resulting in a lower cash wage or none at all).
2. On July 24,2009 the Federal minimum wage increased to $7.25
The federal subminimum wage for tipped workers including servers DID NOT increase. It is still $2.13. In fact, the sub minimum wage has not been raised in 17 years. Only the tip credit increased; meaning employers will be able to count an increased amount of tips towards a servers wage. $2.13 + tips = $7.25
3. Why hasn’t the Federal subminimum wage for waiter and waitresses been raised in 17 years?
In 1996, Republican lawmakers sided with restaurant industry lobbyist and froze the subminimum wage at $2.13. If the subminimum wage returned to 50 percent, then waiters and waitresses would earn $3.63 per hour today.
The Tip Credit (70% today)
A TIP CREDIT is the total amount of tips an employer may count towards the total applicable minimum wage. The federal tip credit is $5.12. per hr. A employer is allowed to pay servers $2.13 because they are claiming servers will make at least $5.12 an hour in tips. THIS IS WHY THEY ARE NOT REQUIRED TO PAY YOU THE FULL MINIMUM WAGE . $2.13 + tips received(Tip credit) must= the full applicable minimum wage.
*Other states and cities have higher or lower tip credits. In Santa Fe, NM, for Example, where the full minimum wage is$9.85 employers take a higher tip credit. They are still allowed to pay servers $2.13 per hr but those servers must make $7.72 per hr in tips. If they don’t, the employer must reimburse them. Some states such as Virginia and New Jersey, allow employers under certain circumstances to take a full 100% tip credit. This means servers in these states may receive no hourly cash wage at all. States that prohibit the tip credit include: Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington. Servers who work in these states receive the same minimum wage as all other workers.
- AN EMPLOYER IS NOT ALLOWED TO TAKE THE TIP CREDIT UNDER THE FOLLOWING CONDITIONS:
TIP POOLING THAT INCLUDES THE BACK OF THE HOUSE EMPLOYEES
These workers are not directly involved in the chain of service. They do not buss or run food to your tables. According to the FLSA, Employers lose their right to the tip credit if they require wait staff to subsidize the wages of cooks, janitors, dishwashers, managers. If your employer requires you to tip out the back of the house, they MUST PAY you the full applicable minimum wage per hr.
WHEN THERE ARE NO OPPORTUNTIES TO EARN TIPS.
Required attendance for staff meetings, training period or any time you must work but are not receiving tips. For example, if your employer requires you to come in on your day off for a staff meeting or to help set up Christmas decorations, they are required to pay you the full applicable minimum wage. Side work can only account for 20% of your shift. Excessive amount of time performing side work forfeits the employers right to the tip credit.
Tip Credit History
1966 The Tip Credit is created. In 1966, the Tip credit was 50%. In 1980, the tip credit is reduced to its lowest rate at 40 percent. Today, in 2010, the tip credit slightly exceeds 70%- the highest in its history. If the tip credit returned to 50 percent, then the federal subminimum wage for waitresses and waiters would be $3.63 today instead of $2.13 per hr.
When the U.S Dept of Labor states “If an employee’s tips combined with the employers direct wages do not equal the minimum hourly wage, the employer must make up the difference”, it only applies to the work week, not just the day you failed to make minimum wage.
(Federal min wage )$7.25 x 7 = $50.75. (daily) or $7.25 x 30 hrs = $217.50 (weekly) In Santa Fe, for example if you worked 30 hours, you must have earned at least $295.50 for the week combining tips and wage. $2.13 +$7.73 (tip credit) = $9.85. If not, the employer must reimburse you.
Overtime on subminimum wages is determined by multiplying the employee’s regular rate of pay by 1.5 and then by subtracting the hourly tip credit. The employee’s regular rate of pay can never be less than the full applicable minimum wage rate. Example $7.25(Fed min wage rate or applicable min wage rate) x 1.5 minus $5.12 (Tip Credit) = overtime hourly rate for servers who receive sub minimum wages.
Vacation pay is considered a “Benefit” and not covered or enforced by Federal/state wage and hour laws. You can file a discrimination case, however, if your employer elects to only provide vacation pay to employees of a certain ethnic background or gender who perform the same job.
WAGE DEDUCTIONS:
The following ways a employer can legally deduct or reduce a servers cash wage or tips include:
- requiring servers to contribute to a tip pool
- deducting a percentage from a server’s credit card tips to cover the cost of credit card processing fee.
- Taking a tip credit.
- Taxes- such as FICA,payroll.
Any other deductions must be approved by you first
WAGE THEFT
The three most common ways a employer may illegallydeduct or reduce a servers wage include:
- Requiring tipped employees who receive a sub minimum wage to participate in a invalid or illegal tip pool. For example, a tipped employee is forced to share tips with non-tipped workers such as dishwasher, cooks, and janitors. These workers usually are not required to report these tips but you may still end up paying income taxes. For more info search: FLSA fact sheet #15 for tipped employees. The Department of Labor just released a revised version of the Fair Labor Standards Act Fact sheet#15 for tipped employees March, 2011.
- Requiring server’s to pay the bill for customers who walk out,mistakes on bills, food sent back and breakages that bring the servers wage below min wage. for example, if a walkout occured and the bill was $200, the owner could not make the server pay the entire amount. Under the revised FLSA fact sheet #15, the employer may in some cases only withhold an amount that does not bring the servers wage below the federal minimum wage of $7.25.
- Requiring tipped employees to surrender wages/tips/earnings to the owner or a manager. Some restaurants may require contribution into a “error account”, meaning that you pay ahead of time for any mistakes you may incur and they keep these tips locked away in the office or safe. Tips are not allowed to become the property of the owner, manager. They must be shared with a tip pool not stored in a safe for future use.
- All of these deductions can be challenged and recovered through the Department of Labor or an attorney. In some states that have treble laws, a server may collect three times the amount in lost wages if the employer challenges the claim in magistrate court.
FILING A WAGE CLAIM:
*You have up to two years in most states to file a claim under the statute of limitations. Some states like New Mexico allow three years to file a claim. – This means ,if you do not want to risk losing your job by making a wage claim, you can wait until you have moved on to another job to make your claim. But you should keep good records, testimonies from other workers, a log of dates and times and any correspondence of email with your employer for when you are ready to file a claim.
You can also hire an attorney who in some cases, may be able to go back six years, while the state in most cases will only award wage claims that go back two years.
FILING FOR UNEMPLOYEMENT
If you file a wage claim and quit your job before you find another job, you may be able to claim unemployment insurance.
To qualify for unemployment insurance you need to prove: You quit for “Good Cause”.
- You must prove that you tried to reconcile the situation with your boss. For example, if the employer is requiring you to contribute to an illegal tip pool as a condition for employment, You need to prove that you raised your concern over the illegal practice and your boss still refused to change the practice. Correspond through email if possible- This establishes correspondence.
Although you may receive a letter of determination that your claim does not constitute good cause, do not give up. Appeal. Many state officials do not thoroughly understand the FLSA and will make a quick judgment. Its up to you to hang in there and make sure they do. Every states is different. You should contact them to find out what they consider valid reasons for quitting. And even if you do find another job while waiting on the appeal, you may still be able to collect on the weeks you certified if you win.
Your Tips: the Basics
1. Service charge vs. tip.
- When a service charge is added to a customers bill, full payment is expected and required from the customer. Tips are strictly voluntary and nonenforceable. Patrons can choose to leave a tip or not, for any amount they choose.
- Any currency/monies recovered or received from a service charge are property of the employer/restaurant and and any monies a server receives from a service charge is recognized as a “commission” rather than a tip and is reported as income.
- Any tip provided by the customer and intended for the server is considered the property of the server and any monies a server receives from a customer is defined as a tip or a gratuity.
So basically, an automatic service charge belongs to your employer and they can choose how much they want to share with the server. They may even choose not to share anything. (if this is the case, they must pay the full applicable minimum wage, not a subminimum wage)
A tip however, even if wait staff is required to participate in a tip pool is still considered the property of the server. Some in the industry believe an automatic service charge would help eliminate financial risk for servers. This however, would only be true if servers are guaranteed a certain percentage or commission, otherwise employers might not disburse any of the service charge to wait staff.
2. Credit Card Tips
- Employers are allowed to charge servers a fee to receive credit card tips by deducting a processing fee. The industry standard is three percent, which means where the policy is practiced, a server may only collect $19.40 out of each $20 in tips. States that prohibit employers from taking this deduction include: Alaska, California, Colorado, Montana, Nevada, Oregon, & Washington.
- Unlike cash tips which are received on the same day, employers are allowed to postpone disbursing credit card tips until the next scheduled pay period.
Statements issued by the U.S. Dept of Labor from Opinion letters dated March 28th, 1977 and February 26, 1998- FLSA sS 3(m) and FOH3OdO5
“Where tips are charged on a credit card, it is the position of the Wage and Hour Division that the tips due the employee must be paid to the employee not later than the next regular pay day and may not be held by the employer while the employer is waiting to be reimbursed by the credit card company.”
“An employer may deduct an average standard composite amount for tip liquidation, rather than individually calculating the precise charge for each transaction, so long as the total amount collected reasonably reimburses the employer for no more than the total amounts charged by the credit card companies attributable to liquidating credit card tips. Any employer attempt to deduct an average standard composite amount for tip liquidation that exceeds such expenditures is not acceptable.”
Tip Pooling
A tip pool is an arrangement where you agree to contribute a portion of your tips to support staff such as the bus person, host or bartender. The Pool House traditionally only includes tipped employees who are directly involved with service such as food runners, waiters, waitresses, host, bartenders, and buss persons. Listed below are some of the most common methods for pooling tips. Regardless of what type of pooled house the employer may use, tipped employees must be informed of the tip pool practice before they start working.
- Tip Pool Method #1 This method is to require wait staff to contribute a agreed upon percentage amount portion of their tips based on actual tips received and/or sales. Ex. Server agrees to a tip out amount of 15% to busser based on actual tips received If a server made $100 in tips, they must at least tip out 15 percent of tips to a buss person. In this scenario, the server can elect to tip out more but they can not fall below the agreed upon amount to be disbursed among the staff. The server also provides the employer with the amount of tips they received after tip out and the amount disbursed. The servers are provided with the daily sales information and know exactly how much food/wine they sold. They retain tips and surrender only the tips required by the tip pool. This is by far the fairest and best tip pool arrangement for both the food server and employer.
- Tip Pool Method #2 requires wait staff to contribute a portion of tips BASED ON TOTAL FOOD SALES. Ex Server sold $1000 in food and beverage sales and or required to tip out 5 percent of those sales. This method is not ideal. If a customer fails to tip, the waiter still is forced to tip out the busser/food runner on sales, not actual tips received or a percentage which means the server assumes the risk solely, not the support staff. EX. A percentage of tips are deducted automatically from Credit Card sale amounts not actually credit card tip amounts.Although beneficial for the employer, it does not fairly meet the compensation of the servers. Also, it can cause headaches if the server fails to make minimum wage due to a bad tip. Another example. Once I worked at a casino which gave away $500 dinner vouchers to its loyal gamblers. Some of these diners came in with the vouchers, ran up the bill, but then did not tip out on $500. Sometimes these diners left only.$10. I was still required to tip out a 15 % rate. ( Assuming I made $100, I owed the bussers $20 dollars even though I only made $10. I lost $10) The result. These type of diners were avoided like the plague and often received the worst service imaginable. Angry and dissatisfied, they wrote searing, awful reviews on trip advisor. My advice: Don’t put your servers in this position. If someone doesn’t tip properly, at least allow for adjustments and share the risk of business with everyone. The servers should not be the only ones who assume the burden of a bad tipper.
- Tip Pool Method #3 Employer may require waitstaff to surrender all tips to a general tip pool where a manager counts tips and then disburses them among wait staff and other workers such as bussers, food runners or hosts/hostesses. This arrangement can work well in a small family type setting. If the employer is trustworthy and the servers trust one another this method can work well. Tipped employees are encouraged to work more as a team. This arrangement is not recommended for large restaurants. In this situation, servers lose their say in how much they want to tip out and can lose the incentive to sell high end bottles of wine if they must share the success of the sale/higher tip amount with the entire staff. Often these types of tip pools are more prone to illegal deductions and coworkers may pocket some of their tips instead of surrendering them. Also, its common for resentment to build among staff who consistently sell more than other servers.
Tip Pool Restrictions: The two most common:
Tip Pool Restriction #1 According to Fact Sheet #15, The U.S. Department of Labor states, “Tipped employees may not be required to share their tips with dishwashers, cooks, chefs, and Janitors.
This tip pool restriction however does not apply to employers who do not take a tip credit and /or where state law prohibits a sub minimum wage for servers
Employers must make a choice: either take the tip credit or require the wait staff to tip out the back of the house. They cannot do both. If employers require you to tip out the back of the house, they lose their right to the tip credit and must pay you the full applicable minimum wage. Some recent lawsuits suggest that managers are also excluded from participating in the tip pool but each state seems to treat this issue differently.
Employers who do elect to take the tip credit and pay their tipped employees a special sub minimum wage are not allowed to also require tipped employees to subsidize the wages of non-tipped workers. When employers do require tipped employees to share tips with non-tipped, employees, the tip pool becomes invalid and illegal. Such a tip pool allows the employer to pay as little as $2.13 pr hr. They enjoy paying a low wage and a lower fica rate for the non-tipped employees. When tipped employees subsidize the wages of the dishwasher for example, the employer can get away with paying the non-tipped worker the regular minimum wage, instead of a living wage; thus reducing the amount of FICA contributions they will need to make for the non-tipped worker.
Tip Pool Restriction #2
In all 3 methods, including employers who do not take a tip credit, tips are the property of the tipped employees, not the owner. In other words, the owner or management may not keep tips for any other purposes than for disbursing among as tips to the tipped employees. This means they can not set aside a certain amount of tips to be used later for errors of the pool house or other purposes. Please visit www.DOL.gov. and search for FLSA Fact Sheet #15 for more info.
REPORTING TIPS
Tips are recognized by the I.R.S. as supplemental pay, subject to full taxation like any other wage. These days the I.R.S. uses documented credit card tips as a mirror, or tool to compare what they believe your reported cash tips should be. In other words, if your credit card tips are normally around 15%, you should be reporting 15% of your cash tips to stay out of the IRS radar. If you report lower cash tips than your credit card tips, you or your employer may be audited and required to pay the difference based on their estimates.
Rather than auditing individual servers, however, the IRS these days seems to prefer treating the restaurant as one unit. Employers are understandably more nervous and you should expect stricter tip reporting policies as they face potential liabilities if you under report. As a food server, you should also have access to information that shows the amount of your total gross daily food and drink sales even if an employer automatically declares daily tips for you. As an employee, you have the right to know the amount declared, what portion was contributed to a tip pool and what amounts were deducted for credit card processing fees.
Also, you should be keeping your own daily record of both cash and credit card tips, the amount and any names of people you contributed a portion of your tips to and any credit card processing fees that were deducted from your tips. This documentation should help in case you are in disagreement with what your employer has claimed for you or if you face an audit. Remember, your total declared tips are the amount after tip out and credit card processing fees.
Total reported cash tips + credit card tips minus tip pool, minus credit card processing fees = your total reported tips subject to tax.
Under reported Tips
Allocated tips are an additional amount of tips determined by your employer and applied to each server/employee for tax purposes whose reported tips fall below the required percentage. This means at the end of the year, when you file your income taxes, you will have to report the allocated tips and are liable for any taxes owed.
Over reported tips: If your employer is reporting a higher amount of tips than you actually received, you have the right to dispute it. Some employers who take illegal deductions from tipped employees such as forcing a tip out to the dishwasher will not require the dishwasher to report the tips they receive. Instead, they simply report that the server did receive those tips and the server/tipped employee is responsible for paying a higher tax amount. You can contend this by keeping a daily record of tips received and reporting these practices to the IRS if the employer fails to make the corrections.
What should I do if my employer reports a higher amount of tips than I actually receive?
You should first point out the mistake to the employer. At this point it is very important that you keep track of your tips. If you notice your employer is consistently over-reporting tips you especially need to be keeping track.
Go to the IRS Web site. Download and print Publication 1244, Form 4070 and 4070A . This is the official document you should use to record your tips. If the employer refuses to stop over-reporting your tips, you can download Form 3949-A. This document is called a Information Referral and will alert the IRS that the restaurant is providing false information. (You can be anonymous and not reveal your identity if you choose) This may spark a investigation by the IRS or prompt an audit.
Meanwhile, its important that you and fellow co-workers document your tips. When you receive your W-2 form at the end of January and it shows a incorrect amount for total tips earned, you can download Form 4852. W2 correction form. Fill it out and submit it to the IRS. The employer will also receive a copy. If they disagree and assert that their records are indeed correct, you will then mail your documented tips from form 4070 to challenge their claim. Any other receipts, documents you receive showing tips also keep. Co-workers who also follow the same steps will help prove your tip income.
You can also contact the Tax Advocacy at 877-777-4778.
Tip History: A snap shot
1942 Supreme court affirms tipped employees have exclusive rights to their tips.
1965 Congress includes tips in FICA withholding calculations with no employer contributions.
1966 The Tip Credit is created. In 1966, the Tip Credit is 50%, From there it varies from 40% to 50%
1977 The DOL releases an opinion letter, that stated that the Department did not question the practice of deducting credit card processing fees from a servers credit card tips.
1988 Restaurants are required by law to pay their own share of FICA taxes on the total reported tip income of their wait staff.
2002 On June 17th, 2002, United States vs Fior d’ Italia, the Supreme Court asserted that the IRS could charge FICA tax on an estimate of aggregated tips. Basically, A San Francisco restaurant is forced to pay over $20,000. in FICA taxes for the waitstaff, whom the IRS believes under reported their cash tips by examining thier credit card tips and making a comparison. Even though the wait staff reported 10% for cash tips, their credit card tips averaged 15% and the restaurant was penalized for the difference.
2006Dept of Labor releases a fact sheet that reaffirms employers are allowed to deduct credit card processing fees from a servers credit card tips.
2009 The Federal tip credit rises to $5.12 and exceeds 70%- The highest in its history.
2010 February, The Ninth Circuit Court affirms: Tip pooling restrictions only apply to Employees who claim a tip credit.
My girlfriends restaurant just started a policy where they are not going to give them any of their tips until the end of the week in one “big” check. Is this legal at all? sounds more like with holding wages or something to me. this is in washington state.
A lot of these questions are answered by searching for the Fair Labor Standards Act #15, http://www.dol.gov/whd/regs/compliance/whdfs15.pdf
Hope this is of some use!
if my reported tips on my paycheck are showing more than i am making how can i change this. where i work we tip the bar 5% on our liqour sales and our support staff get 3% of our total sales. At the end of the day i am tipping out anywhere from 30-35% of what i am making. This large amount that i am tipping out is not being deducted from my claimed tips, which are claimed for me. Is this illegal or is there some law saying they can only claim my tips after what im tipping out which is recorded by managment as well. Do i need to constantly keep track of every dollar I’m tipping out and every dollar I’m leaving with to fight this?
I work at a popular establishment, where we are forced to sign waivers that allow the store to keep a non negotionable .39 cents per hour (with no cap) for “employee meals” wether we eat them or not; we are foreced to pay for walkouts as well as any other scenario where the store may come short. For example, I was forced to pay the balance of a meal becasue the customer’s gift card did not work even though it had the correct balance on the card. Servers are made to wash dishes and bus our own tables both in the presence of a Dishwasher and without one. The store operator, district manager, and general manager have recently announced that we must automatically claim minimum wage with no regaurds to our tips–even on nights where our server reports show that we only had 3 or 4 tables! Is there anything I can do about all of these practices? or should i simply resign to recording my tips by hand and challenging the forced claims at the end of the year?
I work in a family owned business that routinely charges employees $40.00 for a lost check and for cash register shortages when they provide no managerial support. We hand write checks and they also charge employees for any miscalculations. It is a 24 hr establishment and they are only here from 9am to 3pm. Other than that there is no management on site. They also underestimate cash tips so they will pay less into social security for the employee. When I requested them to claim more tips for me to qualify for a home loan I was made to pay the additional amount of the employers share of social security. I reside in the state of Georgia. Is any of this legal?
Fantastic summary, this has been very very helpful to me! I was confused in a few places and thought I would ask about it, risking the chance that maybe I’m just being a pestering asshole, but I’m honestly confused by these sections:
On a $500 dining bill where the customer uses a gift card:
“Sometimes these diners left only.$10. I was still required to tip out a 15 % rate. ( Assuming I made $100, I owed the bussers $20 dollars even though I only made $10. I lost $10) The result. These type… ”
Does that mean tipping out at 15% of sales, or 15% of tips? Was the $100 you made from other customers, or did that include the $10? Does the $20 you paid to the bussers constitute the complete tip out amount?
Is this correct: “if your credit card tips are normally around 15%, you should be reporting 15% of your cash tips to stay out of the IRS radar”? Should it read “…15% of your cash SALES”?
ive worked in resteraunts for 23 years this december i worked a resteraunt buyout so the company got paid but the tip went in the payroll and this our bussiest week of the year can they tax our tipps into nothing most of us got little or no paychecks does this make sense plese help justin oc california.
Not a myth. The law. The only deductions allowed are those that are authorized by the employee. Taxes and the tip credit, thats it. This server should keep any kind of reciept, documentation of being forced to pay and promptly make a wage claim with wage and hour.
Not legal. Applebees was sued by workers for this very reason and lost. They had to pay back servers who spent more than a third of thier time doing “sidework” the full minimum wage. The amount of time your daughter is spending doing side work disqualifies this employer from taking the “tip credit” and paying her the subminimum wage. Talk to an attorney or wage and hour Good Luck
Not legal, but very common. The last restaurant I worked at pulled this. This is why it is very important to record tips every day. I was able to march right in and show my records. They corrected the mistake. If they hadn’t, I would have continued recording my tips and notified the IRS so I would not have to pay taxes on unearned tips. The south is pretty tough. Its a high violation area with little rights for workers. Trying to go to the Federal wage and hour to enforce the tip credit provisions can be frusterating and unproductive. Your wife should wait a while and hire a attorney that specilizes in FLSA and go into with other workers. Good luck
I have been in the restaurant business for 13 years now and have always been told that if a table walks out on you or your cash out is short, by law the restaurant can not make you pay that. Well tonight we had a walk out and the server was forced to pay and was told that the law was a myth. Can someone please clear this up for me so I can have a better understanding. I know this is not about wages but it still involves tips.
My daughter recently began a waitressing job. They pay less than min. wage and she gets tips. She is required to stay 3-4 hours after customers leave to clean the restaurant. Is the restaurant required to pay min. wage during those hours when she cannot earn tips?
My wife works at a restaurant in alabama as a server and they make her claim more tips than she actually made so her wages equal minimum wage and occasionally close her out themselves. Is this legal?
Many factors can impact a servers tips. Sometimes new restaurants will overstaff the floor making it hard for a server to make even min wage. But often when the food is decent and menu prices are mid-range and the floor is not overstaffed, most servers should average at least 15% (granted some regions in the country may influence this). On the west coast, my experience is that most diners are far more generous than the diners I have encountered in the Mid-West or South West.
Because the IRS can now make assumptions about tips based on credit card tips (Fior d Italia vs IRS), restaurant operaters are nervous. The IRS tends to audit the entire restaurant rather than a individual server. What does this mean? It means if the IRS Looks at the credit tips recieved by all servers for that restaurant and the average is around 15%, they will expect that cash tips to be the same. I personally do not declare anything above 15% in cash tips, and thats my right.
At my work, when in training, one of the videos tells the trainees that a low tip total is translated as poor service and that waiter/waitress will either be required to complete more training or will no longer wait. I can understand the theory of bad service=poor tips, but this statement really bothers me. It seems that the company is trying to scare the waiters or waitresses into declaring a certain amount of tips, no matter how much they actually make, so the company can protect their tip credit. Granted, they also say it’s the law to be truthful about tips. But, this method seems kind of sneaky on the company’s part. What are your thoughts on this?
They will probably automatically deduct the “tip amount” for bussers, runners, and the bar from your TOTAL credit card tips or from your sales. I personally hate this system. If they deduct a certain amount from cc sales, then only you the server assumes the risk. In other words, a diner may leave a 10% tip, but you still tip off a percentage. If you sold $200 in credit cards sales and you are required to tip out 30%, they will deduct $12 no matter if you made your $40 or not (20% tip). If it is based on actual sales, then you will not assume this risk.
Make sure you keep track of your credit card tips. RECORD them daily. Have a total amount of tips to compare on your paycheck. If they deduct a portion for tipping out the buss, runner, bar, =Verify that these employees acutally do recieve these tips. If not, they are stealing. With this system, BE SURE YOU KEEP TRACK, otherwise they may try to sneak in other deductions as well, such as a processing fee, tips to manager etc, Just keep track.
I recently heard that we will be receiving tips from ccards in our checks. How will we tip out the 30 percent that we normally do weekends to bussers runners bar? Very interested to see this !
Standing up for your rights always involves risks. Your best bet is to stand together with your co workers. Agree to be wittnesses for one another if you decide to challenge this practice. Make sure you keep documentation for any walk outs you were forced to pay for. If Texas is a one-party state (this means you can tape record a conversation with out the consent of one of the parties) You must be in the conversation, thus the one party consent- then tape your conversation with the manager discussing this matter, then take your evidence to a lawyer. This illegal practice is pretty common and the only way to curb it is by standing up.
If 10% of your credit card tips are going directly to the owner/employer and not other tipped employees, contact wage and hour. If you have documentation of this, consider hiring a lawyer who enforces labor law and FLSA provisions. You may be able to recover not only the credit card tips but the difference in the full applicable Federal min wage as this employer clearly violated FLSA provisions. Also file for unemployment . State your case that Retaliation for challenging a illegal deduction from your wages resulted in your termination. You may just win.
The employer may only hold your credit card tips not the cash. The pooled house has a right to know the exact breakdown of the tip schedule for every day. The DOL does not impose any caps on the percentage a employer may require the pooled house or server to share when they do not take a tip credit. Contact the local wage and hour, ROC-united for more info and consider hiring a lawyer.
I work as a server at an upscale (most of our patrons are millionaires/billionaires)restaurant/cafe in California where all the servers pool their tips and share with the cooks, dishwashers and baristas. Since it’s in California where there is no tip credit, I understand that the back-of-house employees can receive tips. However, I am concerned because we (as servers) only pocket 38% of our tips earned. There are no bussers, food runners, or hostesses at this restaurant, the servers do all of these jobs in addition to their serving duties, so I feel like we should be pocketing more than 38% of our tips.
Also, the tips received by each employee do not accurately reflect the tips accumulated during the hours the employee actually worked. By this I mean we surrender all tips (both cash and credit) to our employer at he end of our shift. Our employer then pays us on a biweekly basis based on the number of hours we worked total in the two week pay period. Servers who work busier shifts get the same hourly wages (tips and minimum wage) as servers who work the slower shifts. Is this legal?
My employer takes 10% of credit card tips, when I finally voiced my dislike of this matter (it’s only to be 3%)…there went my shifts….now I have no job!!
A friend of mine just started working at Texas Road House in Virginia, the managment staff there has informed them that they are responsible for the bill of any table that walks out. Since each person of the wait staff will only have three tables they should be paying attention and making sure that no one walks out. According to your information above this is illegal but, none of the new employees want to raise any questions about it in fear they might be discharged. What do you recommend?
I’ve noticed that when I’ve been receiving my paycheck that the credit card tips I made for the last two weeks were taken out as the total amount. I asked my boss why he was taken the entire amount out and he said he has to for tax purposes. I’ve been doing this for quite a while an I know that they are suppose to take a percentage out, depending on the credit card company not the entire tip amount. I told him that what I’m making on a daily basis he is taking out the entire amount on my paycheck. So I’m really not making anything. Ineed back up on this because these people are snakes but I would like to stop them. Thanh you Maureen
I just started working at a restaurant in my hometown and they have a tip pooling system in which the cooks recieve 50% of our tips, cash and credit. This restaurant has regular dinning tables as well as Hibachi tables (electric stoves at which diners sit at and the cook makes their meals in front of them). The cooks are part of the service just as much as the servers so I don’t mind that we pool and share 50% of our tips with the cooks that cook at the table. I always keep track of how much money I take home and how much of it was credit card tips and how much of it was cash tips. I recieved my first paycheck and the restaurant claimed 100% of the tips that were made for the two weeks on my paycheck including the tips that were tipped out to the cook. So, I recieved 50% of the actual tips and 100% of the tips were claimed on my paycheck and taxed from me. The cooks don’t have to claim any of the tips they make. So, in fact I am paying taxes on money that the cooks made and money that I never recieved. There are 8 restaurants of this kind in the state that I live and half of them are owned by the same owner that runs the restaurant I work in. They have been open for almost a decade and this is how things have been run at every restaurant. I know this is illegal, what should I do? I have not worked there for very long and do not know very many employees, and feel uncomfertable saying anything to them. However, I feel this is very unfair and they should not be allowed to run a business like this. On the other hand this place has created jobs that people here need and I feel if I say something or try to do something I will get in a whole mess of things I do not want to deal with.
I am a waitress and live in ohio and began to really examine my reports that I pull up at the end of the night. We were told that we would be charged 3% of all our tip transactions. Feeling like things were not adding up sure enough did a little math and it comes out to 4.2%. I know many business owners so I put some calls out and they broke it down for me. and they said the most it would be is 3% especially with the volume they do. I know they can charge us for credit card transactions but can they charge us this much? and is there a way to know if they are cheating us before confronting them cause I am sure with just asking I will be fired. thank you
If I have to claim 100% of my credit card tips, is it safe to put the amount of my claimed credit card tips into a bank account?
I worked for this employer for two months for new restaurant he just opened up, it took two months for us, to get paid our min wages stated by law, and he did reported our tip as a lot more that we made for the first month as the restauran opened up during winter snow there was bearly any business. Also I received a noticed from IRS that I owe money in Taxes for the reason I didnt reported earn income for the 2009 year , with the same employer the fact is that I didnt work for the employer during that years, how can the employer repor income from that years when i didnt work for, also I live in TN, and i find out the most Mexican restaurants dont pay the servers minimum wage set by law, some owners make employes work 7 days a week no days off ,but people dont say antyhinf because most of them are ilegal and get paid cash, I’ve worked for another placed were owner told me that he didnt pay the minimum wage because you had to py for the food if you wanted to eat there, and that was the reason, so i told the owner i would bring my own luch and i wanted to get paid, cause I needed to pay on SS, fica and whatever else you have to pay in to, weel he told me that if i wanted to work there the he would pay my taxes but that I would nt get pais the hourluy wage, i needed the job so I stay , two month later he came to me was giving me check to signe it was made to my name, he said he needed to pay someone else and that I neede to sign that check , I told him i would do no such thing and that I didnt work that way and left, that was almost last year, can i still report this employer to the Labor Board?
I live in WV, I’m a bartender. My employer takes 40 percent of my credit card tips. I was tipped 400.00, and he got 160.00 of it. …. is that even legal?
Thanks for your comments! You raised some great questions- such as employer reporting more tips than you actually receive. I was inspired to do some research, talk to The IRS, and wrote a new chapter wise up on your paycheck. You will find some answers to the questions you raised there. Thanks!
I work in a restaurant that requires us to tip out 5 % of our sales. This means if I have 1000 in sales I owe the store 50. The tips are 2% to the bar and they say 1% to the busser ( the busser never receives this pay he is paid min wage and nothing more) 1 % to the food expo she also never receives the money she receive min wage and nothing more and 1 % to the house. The 3 % that is unaccounted for is what bothers me. How can they do this? Also they claim our tips for us we cannot challenge this sum of claimed tips either. So if I have 1000 in sales 200 in tips they take 50 automatically but they still claim i made 200. Meaning i claim more then i make bc they claim it for us. I have repeatdly asked them to lower my claimed tips to my actual tips but to no avail. What should do now is this leagal?
If you are payed bi-weekly, they MUST INCLUDE those credit card tips that were not disbursed for that pay period. Although employers are allowed to withhold credit card tips, they can not make you wait any longer than the normal pay period schedule. Does this place generate over $500.000 a year? If so you can contact Federal wage and hour. If not the state will have to step in. I would recommend pulling the wait staff together and hiring a wage and hour attorney. There are treble laws in many states which means you may collect three times the amount this employer is illegally withholding from you. I believe if you stood up to this employer, they would suddenly find a way to pay out each night. The other option is to make a wage claim through the state. The more of you the better. Be warned though, state employees are notorious for giving out false info. don’t take anything granted and be firm. The Feds might be easier. I would also contact ROCNY.ORG 212-343-1771 Although they are based in New York, they can often offer invaluable advice. The bottom line. What they are doing is illegal and they owe you some money. Its great that you are keeping records, make sure everyone is doing it and work together if possible with the entire wait staff to challenge this practice. Good Luck!
i work at a upscale resturant in NJ. our employer has it set up where servers have to “beg” the bartender at night to recieve cash for our earned credit card tips. now its supposed to be if there ‘s extra money in the register the bartender should pay. they start off with 200$ at the beging of the shift and must end with that. so the only way EXTRA money come about is if a table pays their bill with cash. well now at the end of our shift we know we gave lets say 300$ cash the whole night the bartender says the owner told her she has to pay out the bus boy and the dish washer since their illegaly here and get paid under the table!! so after that 300-200$ she has 100$ left and has to pay her closing fee of 50$ to self now leaves the servers (all 3) with 50$ to share! so we deduct the amount paid to the amount owed and acumalate “server reports”. their are employees with 500$ in “server reports” i currently have 400$ in server reports over 2 weeks old. what are our rights ,when we speak up the owner says theres no money. where is our credit card tips going? please help
Excellent information!
Keep ‘em coming!
Dignity and Respect
Me, The JerBear