UnderCover Waitress: Criminal Behavior or Control Freak?

Thursday, January 31, 2013

Criminal Behavior or Control Freak?

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. 

Control Freak

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.) 

Wage Theft

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. 


  1. It really sounds like they are pocketing the money and calling it a tip out. Awful, I can't believe some of the things employers will try to pull! I hope Dan is able to resolve this issue

    1. Thanks for your concern! It sounds the same way to me, but the head waiter who described the system to me doesnt speak the best english - wages are hard to talk about without the proper lingo. Im speaking with one of the managers about it tomorrow night. Fingers crossed, eh?

    2. I should have called it 'creative criminal behavior.'

  2. Awesome. Thank you so much for the info! If i don't get the answers im looking for tomorrow night when i ask the nice manager about the tip pool, you better believe ill be contacting the proper authorities.

    You're doing amazing work her, UC. Keep it up!

    Amazed at your dedication,

    1. Dan, be careful. Remember, internal whistle blowers are not protected from being fired. Be nice and just ask questions 'cuz your curious or whatever if you choose to speak again with management. (Or you could just ask a busser if they get the extra money.)

      External whistle blowers are protected, to the best of my knowledge. Again, I'm not a lawyer, just a stupid waitress. But if you mention this to your state's authority, I believe you are supposed to be protected from being fired in retaliation.

      Best of luck!

  3. I will be careful, however there was something i forgot to mention! We're supposed to calculate out 5% of our credit tips to pay for the swipe fees on the credit card machine. This seemed like a huge red flag to me at the time, but got overshadowed by the 10% to bussers. Also, i applied to my restaurant's main competition while on break today. It sure would feel great to stick it to them 2 ways!

    Anxious as ever,

    1. Dan, I have found conflicting information re: whether it is legal for an employer to charge you the credit card fees. One source says it is only if you are charged exactly what the credit card company charges your boss:


    2. I'm pretty sure it's illegal to make the employees pay the credit card fees. I had a friend who worked in a restaurant where the owners charged them 2% of the credit payments for two years. He basically told them, "if you don't like it, leave." They were making very good money so they kept quiet. When the business expanded and hired more servers, the new servers threatened to sue. Suddenly the owner stopped charging the servers.
      Dan- Heed UC's warnings on approaching this problem. You might be better off contacting an outside authority then dealing with this person directly.

    3. You know, I just looked at the link and realized they are talking about the credit tips only. In the case of my friend, their employer was making them pay 2% of the the entire credit card payment, not just the tips. Sorry!
      That being said, I've never, in 15 years and 6 different server jobs, ever had to pay for credit card fees.

    4. Neither have I. If the Waiter Pay link is correct, then it seems like a ton of work for a small amount of money for the employer, and not worth it. Other sources say it is illegal; there is conflicting information out there as far as I can tell at this point in time.

  4. Wow, you'll find criminal minds in any industry. We just had two high ranking women arrested and charged with Medicaid fraud here in Tallahassee. I'll just mention their ranks. A CEO and assistant CEO.

    These behaviors are so gross. If you're the boss and making your share in this world, why do you feel the need to skim off some kid's pay? It's this mentality of entitlement. They think they won't get caught, or they are too far up in rank nobody will say anything for fear of reprisal.

    1. Yes, it is everywhere, isn't it? It seems a few bad eggs make life more difficult for the rest of us.

  5. I quit my job today. I have never felt so good about giving up on something ever before.

    Finally free,

    P.S. Thanks again for your help. Can't wait for the next post!

    1. The very best of luck to you!!! Yeah, it really sucks to work for somebody you don't trust. Glad that yoke is off of you, and again, best of luck!

  6. Creative criminal behaviour is a good term for it.

  7. It sound unlawful to me.

    Federal law states, Every employer shall pay each of his employees minimum eage. When did workers become responsible for having to their employer's minimum wage obligations?

    29 USC section 206 Minimum Wage.

    1. Since they became tipped employees.

    2. Correction. When did it become the responsiblity of workers to pay part of their employer's minimum wage obligations?

      In a landmark court case, Jacksonville Terminal, Judge Black stated,

      "It appears to me that the question in these cases is: Upon whom does the statute impose the duty of paying a minimum wage, the employer or someone else? There is no ambiguity in the congressional mandate that 'Every employer' shall pay to each of his employees * * * wages * * * not less than * * the current minimum wage * * ".

  8. Tips are defined under CFR 531.52 as "money belonging to the employee". Please note the singular use of the word employee. The regulation also clearly states that it is the right of the customer to determine who shall be the "recipient" of his gratuity. Not recipients (plural)

    Please understand that this regulation totally rules out the possiblity that section 203(m) is enumerating who employers can appropriate or share the customer's tip among.

    Section 203(m) states, "This subsection shall not be construed to prohibit the pooling of "TIPS" among employees who customarily and regularly receive tips".

    Lets start by understanding that the statute is NOT attempting to list who employers can include in their required tip pools. Likewise, section 203(m) is NOT attempting to list types of employees who have a right to the customer's tip.

    CFR 531.52 clarifies the fact that it is the right of the customer to determine who will be the recipient of his tip. Section 203(m) cannot be saying that certain types of workers are entitled to receive a portion of the customer's tip.

    Secondly, While section 203(m) states that this subsection shall not be costrued to prohibit the pooling of "TIPS".....,
    CFR 531.52 states that when applying the provisions of section 203(m), only tips received as money belonging to the employee may be counted.

    Therefore it only stands to reason that the "pooling of tips" as refered to in section 203(m) is the pooling of tips belonging to the employee (singular).

    This again proves that section 203(m) is not attempting to suggest that certain types of employees have a right to share in the tips received by a worker.

    Those who suggest that section 203(m) does not prohibit an employer from requiring tip pooling against the wishes of an employee are incorrect. Tips, by law, belong to the employee.

    Nothing in section 203(m)can be construed to where you are prohibited from pooling your tips as money belonging to you. Employers who require tip outs and tip pools are unlawfully construing section 203(m) to where the pooling of tips, as defined under federal regulations, is prohibited.

    1. You amuse me. This could become a long conversation, but I would like to craft a new blog post addressing the very issues you have brought up. I just published an answer to a reader's question, so it will have to wait a couple of days, at least. So, later!

  9. I'm sorry for the long post, but I must elaborate on why Federal Regulations would refer to tips as belonging to the employee (singular).

    Many have argued that there are others in the chain of service who deserve a share of tips, however, such logic, hurts all tip earners by confusing the plain and deliberate language of federal laws and regulations.

    The reason why federal laws and regulations refer to tips as belonging to the employee (singular) is, customers must retain both their right to determine who their tip belongs to and the amount they are entitled to claim as their own. Federal law states that all tips received by the employee are to be retained by the employee. section 203(m). Please note, again the singular form of the word "employee" is used.

    If tips are improperly regarded as belonging to a group of workers, there would be no way to establish exactly what portion each group member is entitled to retain as his or her own. Section 203(m) could not be applied to ensure that all tips received by the employee are retained by the employee because there would be no credible way to determine what portion each group member was entitled to retain as his or her own.

    When tips are properly regarded as belonging to the employee (singular), section 203(m) acts as it was intended, to protect those who receive tips. Most importantly, section 203(m) acts to protect those whom customers have chosen to tip.

    When tips are regarded as belonging some ambigous group of workers, it is impossible to insure that those whom the customer intended to tip, and only those whom the customer intended to tip, are protected by section 203(m).

    To prove my point further, please understand this. When tips are regarded as property of employees (plural), someone other than the customer will be tasked with the burden of guessing at who each and every customer intended to tip. Thus, the customer would be stripped of his right to determine who will be the recipient of his gratuity.

    When tips are properly regarded as belonging to the individual employee, those customers who might want several workers to share in their tip still retain thier right to give each worker a tip of their choosing. Thus, when tips are regarded as property of the employee (singular) customers retain their right to determine who will be the recipient of their tip.

    Only when tips are regarded as the individual property of the employee can federal laws act to protect them in the way Congress intended to protect such tipped employees.

    It is clear from the language used in both federal laws and federal regulations that Congress intended to protect the tips of those individuals whom customers chose to tip. Such language insures that both customers and employees alike are protected from unscrupulous business owners and other who would take such tips for themselves.


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