Waiter Dan and I have had an interesting conversation via the comments on my last post, "Against Federal Law." Here are the details of Dan's situation:
- Restaurant holds ten percent of his tips as busser tip outs. Dan does not hand the money directly to the bussers.
- Bussers are paid the full minimum wage, $7.25 per hour.
- When Dan asked what the ten percent was for, he was told it was to help pay the bussers.
Is it wage theft? Maybe, and the answer lies in the bussers' pay checks.
Let's say there are two bussers, and the restaurant prints out pay checks on weekly basis. Let's say Dan makes $200 in tips one week. Ten percent of $200 = $20. So, each busser should receive $10 via Dan's tips.
If the bussers' pay checks equal $7.25 per hour plus $10 in tip out, then no law is being broken. The owner is choosing to oversee and control the distribution of tip out monies. (If he is skimming off the top, for example, giving each busser $9 and pocketing $2, then he is breaking the law.)
The other possibility is that each busser is paid $7.25 per hour and nothing more. If the ten percent of Dan's tips are being used to "offset" the cost of paying bussers, then the owner is committing wage theft. Here is why:
The Department of Labor's clearly explains in its Fact Sheet #15: Tipped Employees Under the Fair Labor Standards Act (FLSA) what an employer must do in order to pay a tipped employee less than minimum wage. If the employer is using Dan's tips to "offset" the cost of paying bussers, then he is, essentially, taking a tip credit on the bussers' pay.
In order to take a tip credit toward the pay of any tipped employee, the employer must communicate to the employee:
1) the amount of cash wage the employer is paying a tipped employee, which must be at least $2.13 per hour;
2) the additional amount claimed by the employer as a tip credit, which cannot exceed $5.12 (the difference between the minimum required cash wage of $2.13 and the current minimum wage of $7.25);
3) that the tip credit claimed by the employer cannot exceed the amount of tips actually received by the tipped employee;
4) that all tips received by the tipped employee are to be retained by the employee except for a valid tip pooling arrangement limited to employees who customarily and regularly receive tips; and
5) that the tip credit will not apply to any tipped employee unless the employee has been informed of these tip credit provisions.
The emphases are mine.
The employer has not clarified with the bussers any tip credit amount. So, one week each busser's pay may be "offset" with Dan's tips $10. Another week, Dan makes more money and the employer keeps $50 from Dan's tips. Instead of paying the bussers an extra $25 each, the employer pocket's Dan's tips to "help him pay the bussers." He hasn't clarified a tip credit because it changes based upon how much money Dan makes. And that is against the law.
There is no difference between what the employer is doing and keeping Dan's tips to "help him pay his car payment" or "help him buy a new pair of shoes." Dan's tips are not for the employer to "offset" the cost of anything. Dan's tips belong to Dan. In a valid tip pooling arrangement, bussers may be paid tip outs in addition to their hourly wage. The employer may not "offset" the bussers' pay checks with Dan's money.
Another scenario would be the employer paying each busser $5 per hour and taking a $2.25 tip credit. If tip outs received by the bussers did not bring them up to at least $7.25 per hour, the employer would have to make up the difference. On the other hand, if the tip outs caused the bussers to earn an average of $10 per hour, they get to keep the money.
Dan's tips are not for the employer to use to "offset" the cost of anything. The laws regarding tip pools, tip credits and tipped employee wages are specific in order to avoid this type of abuse.
There are three different offices listed in PA's Wage and Hour Division:
They are a good first stop to discuss wage theft in a business in PA.