UnderCover Waitress: 2014

Sunday, December 21, 2014

Never Pay Tax on Other People's Tips or Tip Outs

Ask the Waitress!

This problem is one people write to me rather often. This is unsettling because every time someone says, "this is happening," we have another restaurant owner breaking the law.

Here is a good example:
Hello Waitress,
My employer is taxing me on 100% of my tips on my paycheck and giving them all to me but......is telling us to tip the bussers and bartender 25% of our wages, yet they are not taxing the bussers or bartender on any part of that 25% and they are telling us we are required to pay them their percentage of the tips when we get our paycheck.  I want to tip the bartender and bussers, that is not an issue. 
So if I make 500$ in tips, i will receive all $500 on my check and will be taxed on all $500.   Then I am expected to hand out $125 of that money. The bussers and the bartender are not taxed on this.  
If you make $500 but have to tip out $125, then you pay tax on $375. The recipient of your tips pays tax on the $125.

Internal Revenue Service

The above law is via the IRS and applies to all fifty states. It does not matter whether you earn a tipped minimum wage or full minimum wage, the IRS requires you to pay tax on your own income. They do not require you to pay tax on other people's incomes, and they don't allow your employer to tell you to pay somebody else's income tax.

IRS Publication 531 was last updated in 2013. It states clearly that your employer may use an electronic tip record to record daily tips, but that if he does, he must give you a paper copy.

Under "What tips to report," the IRS writes:
If you participate in a tip-splitting or tip-pooling arrangement, report only the tips you receive and retain. Do not report to your employer any portion of the tips you receive that you pass on to other employees. However, you must report tips you receive from other employees.
Therefore: you do not report money you don't get to keep, AND those who receive tips from other employees must claim the money for themselves.

Another handy page at the IRS website is "How Do You Report Suspected Tax Fraud Activity?" There are forms you can print and fill out, and you are allowed to remain anonymous if you choose. You may use this resource to report a business you suspect (or know very well) is guilty of not complying with tax laws.

Thanks for writing, and best of luck. 

Saturday, November 22, 2014

Don't Lie to Balance The Books

Ask the Waitress!
Hi, i work at a pizza restaurant as a server and my state pays 3.10 minimum for servers and 5.05 is the "tip credit" we have to claim. For example, tonight I made $14 after 8 hours at work but they still require me to claim $40.40 knowing I did not make that amount. Reasoning is its the beginning of the week and it will balance out at the end. I feel that this is unfair. Can you please give me some insight on this. 
Yes, I will try to offer some insight.

Tip Credit

First, a "tip credit" is not something you claim. You claim income, and only if you earn it.

A tip credit is the amount of money the restaurant saves as long as you earn enough in tips to cover minimum wage:

$3.10 + $5.05 = $8.15. This tells me that the minimum wage in your area is $8.15. Your employer is paying you a tipped minimum wage of $3.10. As long as you make at least $5.05 in tips per hour, you are making minimum wage. If you make less, your employer owes you money.

Claiming Wages

It is illegal for an employer to require you to claim money you didn't make. Period. If they are paying you the tip credit on a weekly basis, they don't need you to lie at the beginning of the week.

For example:

You work 8 hours on Tuesday. Tips are bad, and you earn less than $8.15 per hour. You claim the $15 in tips you made.

If your employer is correct, that it will balance out by the end of the week, then Friday should look like this:

You work 8 hours. You make $200 in tips.
$200 +  $15 = $215.
$215 \ 16 hours = $13. 44.
It did balance out; your employer does not owe you any tip credit.

For this scenario to work, you did not have to lie and claim money you didn't earn on Tuesday. Let's look at another scenario:

You work 8 hours on Tuesday. Tips are bad, and you earn less than $8.15 per hour. You claim the $15 in tips you made.

You work 8 hours on Friday. Tips are bad again, and you only earn about $30. 
$30 + $15 = $45. 
$45 \ 16 hours worked this week = $2.82.
Your employer owes you part of the tip credit. 
$5.05 - $2.82 = $2.23. 
16 hours x $2.23 = $35.68. 

In this scenario, your employer owes you $35.68 for the week. This is in addition to the $3.10 per hour he is already paying you. 

You should never be required to lie to the IRS about the amount of money you made. If your employer tries to say, "This is just for our bookkeeping records" then he needs to be audited, because his records should be accurate. The IRS would agree with me on this point. 

In my opinion, for all it's worth, you are being mistreated and stolen from. Remember, I'm not a lawyer, just a stupid waitress. ;-D 

Best of luck to you, 

Sunday, November 16, 2014

Tell Your Story!

I made a new contact recently. She is currently waitressing and collecting stories and experiences about what it is like to work in the restaurant industry. She would like to include anonymous quotes and stories from those of us who toil in food service. And she wants to hear from you!

As I do on this blog when people write to Ask the Waitress!, this lady will keep your personal information confidential and anonymous. When you write to her to share your experiences, she will need you to give her some information upfront so she knows you are real, but it will never be published or shared.

Please write to Jess Miller at jess@debt.com if you would like to share your experiences with what it is like to work in restuarants.

* Have you been promised monies or benefits that you never received?
* Is the tip sharing arrangement in your restaurant fair and legal?
* Can you get time off when you need it?
* Have you ever been harassed?

And anything else you think is pertinent.

Best to all!

Sunday, September 7, 2014

Paying Tax On Somebody Else's Tips

Ask the Waitress!

This is from the state of Virginia:
My wife is a waitress in family restaurant in VA. The manager gets paid a salary and also considers herself a waitress. She makes them split tips. I don't think this is fair because she gets paid a salary; which is a lot more than waitresses. Is this legal? 
Now the manager wants them to split tips but have to pay taxes on what it was before split. Is this legal? Ex. Friday night my wife's sales were $600 and the other two were around $250 (including so called manager). Before split my wife had over $120 in tips,  after split she had $75. Doesn't seem fair. 
Now the manager wants them to claim cash tips too besides credit/debit card. I know IRS wants 100%. My wife was claiming her credit/debit transactions and adding to it with her cash to get 15%. Can they make her claim what they want? Last week her pay check stub said she grossed over $300 and $235 in tips; she made $100 less. Something is going on here not sure what she should do. Advice would be greatly appreciated.
You bring up more than one problem; let's tackle them one at a time.

Virginia Tip Laws and Managers

Unfortunately, it looks like Viriginia is one of the states that does allow managers to take a chunk of waitress tips. At the Nolo Press web page about Virginia tip pools, it states:
According to the federal Department of Labor, only employees who regularly receive tips can be part of the pool. Employees must receive notice of the tip pool, as explained above. Employees can't be required to share their tips with employees who don't usually receive their own tips, like dishwashers or cooks. And no employers are allowed in the pool: Tips from a tip pool can't go to the employer or, in some states, managers or supervisors.
If the manager is waiting tables, she can say she is an employee who regularly receives tips. Plus, in Virginia if she is a manager but not the owner/employer then she can legally require you to include her in a valid tip pool. 

This is where what the manager can get away with stops. 

Claiming Tips and Tax Fraud

You are correct when you state the Internal Revenue Service (IRS) requires waitresses to claim all of their tips, both those given on credit/debit cards as well as cash tips. One hundred percent of your wife's tips are the tips she brings home as her pay. Nobody, NOBODY has to pay taxes on somebody else's take home pay. 

If your wife makes $200, but has to pay the manager/waitress, for example, $50 of those tips, then your wife is supposed to pay taxes on $150. Not a penny more or less. 

If this manager is requiring waitresse to give her their tips but pay taxes on the full amount ($200 in the above example) this is called "Tax Fraud." I recommend your wife contact the IRS. The IRS may be very interested in conducting an audit of this restaurant and this manager. How Do You Report Suspected Tax Fraud Activity?  on the IRS's website gives you the information you need. I suspect you will fill out form 3949-A, but you may call the toll-free number for any clarification you may need. 

Good luck. 

Wednesday, September 3, 2014

Anybody Else Watch "MasterChef?"

I adore MasterChef.

If you haven't seen the episode that was new on Monday, September 1st, stop reading now.

Got'ta love Jaimee, and I was sorry to see her go. Am also blown away that Cutter is still in competition. Many thanks, however, to Joe Bastianich for nailing exactly what is wrong with Cutter:

Joe Bastianich on MasterChef: 'Cutter's Food Isn't the Only Thing That's Outdated'

Nailed it. 

Saturday, August 23, 2014

More Tip Questions: Petit Larceny

Ask the Waitress!

First, I know I am behind on posting, and yes, there are questions in my email to which I have not yet responded. I do apologize to anyone who feels ignored; it is not your question, but rather, my schedule that keeps me away from the keyboard.

This is a new one, in many senses of the word. My jaw hit the keyboard when I read this plea for help from the state of New York:
My friend is a waitress at a Bar/Restaurant and a bartender is threatening to either get her fired or sue her for petit larceny because he feels she hasn't been tipping him out his fair share. This is in the state of NY. Is this legal and if so how can she prove she was not in the wrong. 
Petit larceny? Really?

Petit Larceny

Petit larceny is a crime. You don't sue people for crimes; the District Attorney charges people with them.

Lawyers Crotty and Saland explain that New York Penal Law 155.25: Petit Larceny is, in the simplest of terms, about stealing. Usually, but not always, this is in the form of shoplifting. The difference between petit and grand larceny is the value of what was stolen.

I'm not a lawyer and I do not give legal advice. However, as a citizen of the United States I would be shell-shocked if the District Attorney in any state feels it is worth the court's time and energy to get involved in an argument about tip outs between two tipped employees. This is something the employer or manager should be able to handle. Petit larceny is when you leave Macy's with a new outfit in your backpack that you didn't pay for.

If the bartender is truly a petty (ha! sounds like a pun) jerk and is convinced that your friend owes him money, his only legal recourse would be to sue her in small claims court. The burden of proof would be on him, meaning if he can't show:

  • A formal restaurant policy that waitresses tip out bartenders a certain amount; and
  • Proof that she is violation of the terms of her employment, 

I highly doubt this would be considered anything but a waste of time. However, that is my personal opinion and, after all, I'm not a lawyer, just a stupid waitress. ;-)

New York Tip Laws

I found this seven page PDF of frequently asked questions regarding New York state tip laws. I recommend your friend print this out for reference. A few relevant things:

  • Both bartenders and waitresses are considered tipped employees.
  • Tip sharing and tip pooling are legal. 
The situation you are describing is tip sharing, when employees dole out their tips to other employees who gave direct customer service.
  • The employer may require and spell out the rules of tip sharing. 
  • The employer may mandate the percentage of tips to be shared. 

So, my question to you is does your friend pay out a percentage of tips earned, or a percentage of sales to the bartender? I am guessing the former, because a percentage of sales would be easy to prove by looking at receipts. It sounds to me as if the bartender assumes your friend is lying about her cash tips, and wants her to pay up. However, he has no way to prove such a thing.

  • Employers are required keep track of tips. 

This is done via waitresses and bartenders reporting their tips to the employer and to the IRS. Your friend  should be doing this at the end of each shift. If she claims $100 in tips, and the rules state she owes the bartender ten percent, then she owes him $10. His suspicion that she pocketed an extra $20 in cash and didn't claim it is difficult to prove.

  • Employers are not responsible for waitresses who don't claim or share cash tips. 

In other words, if the bartender goes to the owner and says, "She made $20 she didn't claim. She owes me another $2," the owner does not have to pay the bartender.

However, if the owner believes the bartender he may be highly annoyed with the waitress.

At-Will Employment

Unfortunately, most waitresses and bartenders are at-will employees, which basically means no job security. I don't know anything except what you have told me, but if your friend thinks this bartender could get her fired, she is well-advised to document conversations and events (just write down what he said, when, and what happened.) She should also line up her allies, such as co-workers or managers who trust and respect her.

While the bartender is making big threats, he may not have a leg to stand on. This may turn into "he said, she said" and get resolved based upon who the owner trusts, likes, and needs to keep in his employ.

Good luck.

Wednesday, August 20, 2014

Where’s the Breaking Point for Employees? [Infographic]

Many thanks to Oliver Carsson for supplying me with this interesting infographic and guest post. On "things the bug employees," 74 percent said "subpar benefits." Heh. I'll bet closer to 100 percent of waiters and waitresses might have that complaint. 

Enjoy this guest post! 


Have you ever had something bug you at work? Maybe it started out small, like you had to answer that email while you were on the beach with your family. Or your boss called you after you’d already turned out the lights and snuggled down for the night.
Or maybe it was a little bigger. Linda got promoted as your team’s lead when you and she both know that you’ve been there longer and care more about the team’s success. Perhaps your manager wouldn’t let you take a couple hours to go help in your first-grader’s Halloween party even though you would have made up the time and some. Whatever the reason, something bugged you enough that you just couldn’t forget about it.
BambooHR just completed a survey of over 1,000 current employees in the US to find out which things annoyed them and would ultimately turn into the breaking point for employees.

They highlight their findings in the infographic below specifically why people leave their jobs, employees top five workplace deal breakers, and the biggest situations that annoy employees.

Read more on BambooHR.com and feel free to check out their hr software.

Wednesday, August 13, 2014

The Turkeys: RANCH

Long time no see, my friends. Summer has flown by and I am behind on posting; with the school year about to begin I shall only become busier!

Many thanks to waiter and comedian Chris Maddock from Minneapolis, MN, for sending us this video. The Turkeys is a comedy group made up of funny people who have worked in restaurants. Enjoy!

If you want to find out more about these turkeys -- oh, I mean The Turkeys, check out their website:


Personally, I prefer a little olive oil and balsamic vinegar.

Thursday, May 22, 2014

How Not To Carry A Tray

Quite a while back I answered a serious and important question: How do you carry a tray? To the uninitiated, it must seem like magic. We must have invisible wires holding up those huge, incredibly heavy trays full of dishes piled high, or drinks full to brim. Spill the drink, say goodbye to your tip.

Those of us who are "initiated' and well-versed in manuevering full trays around the dining room with the grace of ballet dancers would sincerely prefer to have a system of pulleys, wires, anything to make our jobs easier.

This video is a lot of fun; it shows customer reactions just before getting spilled on. I would love to get to play this waiter.

Customers may wonder what tricks we have up our sleeves; we have none. However, I recently found this picture on Friki.net. The site seems to have a number of creative inventions. Not sure if this would make carrying drink trays any easier, but it is still an interesting idea.


You may have already seen some of the following short collection on YouTube, but really, you just can't see them enough. We may be professionals, but nobody should be trying this anywhere.



Tuesday, May 6, 2014

Some Sarcasm For Tuesday Laughs

Went browsing on Pinterest for "some e cards" that seemed relevant to my years on the floor as a waitress.

I took a couple of sabbaticals, and even though I returned to the same restaurant after each one this was truly me. Hey, just being honest.

Seriously, it didn't take me long to get back on track and know what I was doing. Shifts may be going great, money is coming in, and then it hits me: 

The notorious bad tipper seems like a nice guy. He and his group are always very pleasant to wait on, but they leave ten percent. Every time. Yeah, I remember him. 
Tourist season brings in vacationers who act as if everybody exists to entertain them. I don't mind people being excited to be on vacation -- actually, it's nice. And I am always happy to answer questions about the area to the best of my ability. Unfortunately, many tourists lack appropriate boundaries. My personal life and personal history are not menu items. 
We had a night when the kitchen seemingly blew up and all hot food came out ridiculously late. People literally waited over an hour for their meals. A woman who was ready to bite my head off while waiting really did apologize after she got some protein into her body. I remember her warmly, because she had the grace to approach me to say she was sorry. 

Then, there are the tables I look at and think this. 
Everybody wants something for free. Nobody wants to have a "stupid waitress" be right when they  are wrong. The hair you discovered halfway through your salad matches your own, and there are no blondes working in the kitchen. You ordered the fish, that's why I brought you fish. (She was expecting eggs.) Yes, I did tell you the craft beer was a double size. (He lowered my tip to punish me.) And so forth. I also made the mistake once of correcting a patron's pronunciation of a menu item. Yup, you guessed it: lower tip.  
That is when this starts: 

People tip better when they see you as their friend. Waitressing is emotionally exhausting, too. 

It is unfortunate that alcoholism is rampant in the restaurant industry. It is not, however, surprising. This was me getting ready to eat my own dinner after the restaurant was empty. 

It's never a good idea to do this. 

In restaurants, we have our language. "86" is the least of it. 
And last but not least, this is for all servers on the floor who live in states with a tip credit, i.e., they make less than minimum wage: 

Happy Tuesday! 

Sunday, May 4, 2014

Tip Sharing Arrangement Seems Unfair

Ask the Waitress! This plea for help comes from Wisconsin:
I work as a server at a mongolian grill style restaurant. Patrons are greeted, seated by a host (sometimes, during the week there often is not hostess.) Servers take orders of drinks, expo stuff like salads and rice, and also use the deep fryer for appetizers and deserts. 
The patron walks up to a food line with raw ingredients and choose what they like. They give it to our cooks which our company refers to as "Grill Warriors", they cook the meal then give it back to the customer, and the customer returns to their table with their meal. By then, the server has everything else on their tables. The server also refills drinks and does bussing and pre-bus work, as well as side work duties for the shift. 
I have already alerted our local department of labor standards today and took a complaint form with me, but I still did not get a definitive answer as to whether or not the following is legal: Servers make 2.33 an hour and are customarily tipped employees. The cooks, or "Grill Warriors", which are considered back the house employees, are paid an average well below minimum wage, about 3.15 an hour. The cooks have a gratuity bucket at their grill, and also perform visual entertainment to customers to encourage them to tip the cooks but are not required to do so. Our company manual states "2.5% of servers' sales (excluding retail, gift card, or employee meal sales) is collected by the company for the purpose of tip pooling." "The tip-pool will be shared with other employees who customarily receive tips (bartenders and grill warriors)."   
The cooks do not tip-pool the tips they receive at the grill from their bucket. That cash is split up amongst the cooks by the end of their shifts. As I understand, they do report those tips for tax keeping. However, the money from the servers' tip-pools goes to the cooks, and the cooks aren't tip-sharing to the servers. 
Also, our managers are able to go into the system and change the numbers of the tip amounts people report when clocking out and I don't know if that is concern to coincide with this issue. Thank you very much. 

Thank you for writing. First, I understand your frustration because the situation does not sound fair. Also, kudos to you for approaching your Department of Labor.

Tipped Employees

By under-paying "grill warriors" and setting it up so they customarily receive tips, the restaurant at which you work has turned them into tipped employees.
  • They customarily receive tips;
  • The employer takes a tip credit;
  • They make at least $30 in tips per month. 
The Wisconsin Restaurant Association makes this much information available to non-members on their website. To see more, you have to joing their site -- I'll pass. 

Tip Pools

Another source I like to check is the Nolo Press. On Wisconsin Laws for Tipped Employees, they state: 
According to the federal Department of Labor, only employees who regularly receive tips can be part of the pool. Employees must receive notice of the tip pool. Employees can't be required to share their tips with employees who don't usually receive their own tips... And no employers are allowed in the pool: Tips from a tip pool can't go to the employer or, in some states, managers or supervisors.
Remember, "Grill Warriors" counts as tipped employees in your restaurant. You received notice of the tip pool. The problem with the tip pool is that it is unfair. Both cooks and servers are receiving tips; you have to share with the cooks and they do not have to share with you. Nolo also states:
Many states allow employers to require tip pooling or “tipping out.” All employees subject to the pool have to chip in a portion of their tips, which are then divided among a group of employees. 
To interpret this in favor of the restaurant, we would have to define "employees subject to the tip pool" as those who must pay in only. To interpret in favor of servers, we would define "employees subject to the tip pool" as everybody involved, in and out. Unfortunately, "divided among a group of employees" is not just the group of employees who chipped in. When servers tip out bussers and bartenders, the bussers and bartenders do not chip in any tips. Bussers seldom make tips, and while bartenders do most restaraurants (I believe) do not require the bartender to chip into the pool. It is a one-way street.

I think the situation in your restaurant is favoring the cooks over the servers, and it doesn't feel right.  If servers have to pitch in 2.5 percent of sales, perhaps cooks could pitch in 25 percent of the tip jar to be spread out among all tipped employees. Or just stop the tip sharing all together. But as far as I can tell, it seems legal. As you know, I am not a lawyer nor do I give legal advice. All I do is read around, ask my friends and ask you if you want fries with that. ;-)

Claiming Taxes

Each and every employee is responsible for claiming his or her income for tax purposes. If you claim your tips appropriately, and another employee does not, it should not be any skin off your back, so to speak. If the restaurant gets audited and you are honest, it should not cause you any more than an inconvenience.

I am disturbed by the fact that managers may change your tip reporting. This is an issue you may wish to alert the IRS. If you ever get audited and the numbers were changed, you had better be able to prove it.

Thanks again for writing and I hope this is helpful in some way. If anybody has different information or thinks I am wrong, please write in. (Hey, I'm just a stupid waitress! ;-))

Wednesday, April 23, 2014

The Manager's Legal Handbook

The Manager's Legal Handbook is a publication of one of my favorites companies, The Nolo Press. Sometimes I get questions from my lovely readers who are in management positions. If you are a manager and you want to keep you nose clean, this is the first reference you should turn to!

This book is not restautant industry specific. It is for anyone who oversees employees. It covers the nitty-gritty about overtime, offers sage advice about how to draft workplace policies, and how to hire people.

I highly recommend this easy to use reference for anybody who is in a position of management of other people.

The Manager's Legal Handbook

The Manager's Legal Handbook
The quick reference to employment law for anyone who oversees workers.Whether you're managing workers or working in the HR department, The Manager's Legal Handbook is the perfect introduction to supervising employees and independent contractors safely and legally.Need some information about overtime? Want some useful ideas on workplace policies? Have a question about trade secrets and need the answer now? This one-of-a-kind book provides everything you need to stay within the bounds of the law, including: frequently asked questions  concise articles  helpful tips  "lessons from the real world"  dozens of resources, online and off Designed for managers and supervisors who need answers quickly, as well as professionals pursuing a career in human resources, The Manager's Legal Handbook covers hiring, firing and everything in between.The 6th edition incorporates the latest legal changes to the Americans with Disabilities Act and the Family Medical Leave Act, and covers recent Supreme Court decisions on retaliation. It also includes more detailed information about layoffs, setting pay and communicating with employees.

Sunday, March 9, 2014

Bad Changes With New Ownership

Ask the Waitress!

The following plea for help arrived from Ohio:
We are getting a new owner in our restaurant. We will have a new POS, new menu and new policies. Since the transition began, he has taken away from our busser and bartender receiving tips. They both were previously making less then min wage. The busser used to make $4.00 Hr + tips at 1 1/2% of our sales for the hours he was actually there. Bartender received $6.30 + tips from us based on our alcohol sales. They now are both making min. wage( $7.95) and no tip outs.  
The problem is the new owner says we have to “tip the house” 3% of our total sales which includes tax on every shift. I asked him yesterday how will they distribute the tips from the tip pool back to us, the sub-min wage employees and he said we don’t get anything back. The 3% cash “to the house”will be put into an envelope from each server and we have to put it under the cash drawer at the bar. He said that money then will be deposited into Payroll sometime during the week and it will pay the busser’s wages. I said but he is already getting min wage. He said that is their policy, asked me if I was disgruntled. I said “Ya a little” and then he walked away.  
I think I understand the Tip credit and tip pool policy so what he is doing is illegal isn’t it? If there is a tip pool and us servers make sub-min wage doesn’t that pool money have to come back to us and not anyone who already makes the regular min wage. Us servers are the ONLY ones who make a sub-min wage, no-one else. We believe he is just pocketing the 3%. The accountant who takes care of payroll now says she doesn’t know what he does with the 3% after he gets it. (So he must not claim it then is what I figured.) Then as I said above, he told me yesterday it gets deposited into Payroll to pay the busser’s wages. So I think they are both lying.  
Our busser works Fri and Sat from 5-8 or 9 only. How can 3% from our sales, from every girl, every shift,  7 days a week only pay his 8 hour a week job, (which I think is illegal anyway) but what’s he doing with all the rest of the money? There is no paper trail of us putting in 3% because its cash and the POS doesn’t adjust for that. If we do have to participate in the pool does it have to be documented somewhere/somehow? I am going to refuse to pay him the 3% Monday night after my shift is over. I am ready to get fired, but I will not let him steal from me. My co-workers are planning on doing the same as of now.  I have called The Dept Wage and Hour and left a message. I am waiting on a return phone call about this. I am hoping if you see this you can let me know if this is illegal or not and help me with what to do next.
2nd... Starting Monday, each employee will automatically have $1.00 taken from their pay check for each shift worked for drinks. Doesn’t matter if we drink water, or bring our own drink in, he is taking $1.00 out anyway. Is this legal? I don’t agree with having it deducted from my check. Can he still do it even though we were told verbally but I don’t agree to have money taken out?  He gave us an Employee Handbook that we are to sign and agree too. NOWHERE in the book does it say anything about the 3% to the house or the $1.00 drink charge. I have NOT signed it yet. When we had our initial meeting with him and his accounting staff, the 1st thing he said to all of us is that " his accountant is paid by him. She will do what she needs too , to  protect him. She will throw each and everyone of us under the bus if needed. She will protect him no matter what." That was the 1st red flag to all of us before anything else. 
 I know this is long and I hope it makes sense. Im very angry about this and sad too. I love the place I work but I cannot just hand over money I have earned to someone just because I work at his place. I guess he has done these things at his other place for years, and never been questioned on any of it.
Sorry for your troubles. It breaks my heart and makes me angry when I read (over, and over, and over again) the same troubles coming from so many employees about the same exploitation at the hands of restaurant owners. We seem to be fighting a war.

Let's go through your letter to me, and I will do my best to address your questions. Please remember, I am not a lawyer (just a stupid waitress, haha) and I can not and do not give legal advice.

Tip The House

Good for you for calling the Department of Labor! That is exactly what I would have suggested.

Okay, you understand that you (and other tipped employees) may be paid less than minimum wage, as long as the tips at least make up the difference. In addition to this, if you employer chooses to pay you full minimum wage: this does NOT change the tip pool laws. 

An employer is not part of a valid tip pool. A busser (or bartender) who is paid full minimum wage or more may still be part of a valid tip pool.

So, the busser makes minimum wage, and servers pay out three percent of their tips "to the house." Illegal. It is not legal for the employer to "put the three percent back into payroll" even if it is to offset his costs of paying the busser. The laws requires these things be spelled out and the books must be clear. That three percent must be accounted for.

You might want to call the IRS and let them know that your tips are being misappropriated by your employer. "I was just doing my job" may not fly with them when they interview to the accountant.

The bottom line: if the new owner wants to offset his payroll costs with tips, he must utilize the tip credit. He may not pocket tips; all tips must be accounted for. 

On another note, you should not be paying taxes on the tips you give away, and lack of a clean record results in you doing just that.

Here are a couple of additional resources that I find to be quite useful:

Ohio Wage Laws

Ohio Tip Policies

Remember, no state can break federal law:

Federal Laws Tipped Employees

Dollars For Drinks

Employees must be informed of any change in compensation before it happens. Not sure if stealing an extra dollar from you every night is technically illegal, as you were informed about it and what it was for. Just because something is legal, however, does not make it right. Your new boss seems to be taking the attitude that you are all stealing beverages from him, so he may as well just charge you for them. It's also petty.

He sounds like a bully.

Glad you don't mind the possibility of not working at this restaurant in the future. Part of me hopes all of you walk off the job and leave him hanging. Ideally, you will all get better jobs working for honest business owners.

Best of luck, and thanks for asking the waitress!

Monday, March 3, 2014

Tax Time 2014

Just a quick reminder: tax time is fast approaching! If you have questions or concerns about keeping track of or reporting your tips, head on over to H&R Block's blog post written by yours truly for some answers:

How to Keep Track of Your Tips for Tax Purposes

And remember the golden rule of thumb: If you earn it and keep it, report it. If you give it away as a tip out, don't report it. For example:

Tips earned: $100
Tip outs:    $10
Take home tips:  $90.

You claim and pay tax on $90.

Happy tax time! ;-) 

Sunday, March 2, 2014

Virginia Laws and Tip Pooling

Ask the Waitress!
Hi, my manager has a small salary, and he gets half of my tips every night. The owner of the restaurant is a lawyer, and he said it's legal in the state of Virginia that a manager share the tips with the server. We are not talking 30 or 40 dollars, it's around 1000 a week. The manager's salary is around 400 dollars a week. He helps opening wines, cleaning tables. Now the GM wants her cut, because she said, she helps seating people.
Isn't it fun to work with greedy people? Seriously, thanks for writing. I'm glad you told me the state you work in, that is helpful.

Your boss is correct; in the state of Virginia there are no laws against management putting their hands in the tip pool. The owner himself may not take home a cut of your tips.

In the state of Virginia, you could be making as little as $2.13 per hour. Your employer is responsible for making sure your take home pay is at least $7.25 per hour. There is no minimum amount of tips you must make before you are considered a tipped employee. For example, in Kentucky and Maine, you must make at least $30 per month in tips to be considered a tipped employee. Virginia has no limit. And if Virginia, you may legally be required to include any percentage of tips into a valid tip pool; in other words, giving up fifty percent or more of you tips is still legal.

The Nolo Press has a nice write-up of Virginia tipped employee laws: Virginia Laws for Tipped Employees. 

Valid tip pools include employees who may receive tips as part of their jobs, in other words, front of house employees who interact with customers. Technically, if the GM seats people her claim is not illegal; it may be unreasonable, however.

In most industries, employees expect the owner to budget to pay them their wages, salaries and benefits. In the restaurant industry, non-server employees look to the waiters and waitresses for their pay. It's like "trickle up" theory.

Sorry I don't have better news for you. Please remember, I am not a lawyer and I don't give legal advice. I enjoy trying to dig up answers and facts for people. ;-)

Sometimes, it is a good idea to keep your eyes open just in case you can get a better job. Only you know if that is what you need to do.

Best of luck, and thanks for asking the waitress!

Tuesday, February 25, 2014

More Questions and Answers in the Tip Out Debte

Ask the Waitress! This question was left as a comment on an earlier post.
I am joining this conversation really late, but I am trying to find any legitimate advice on how to handle my new work situation. I have been a server for years, and have always worked in places that are busy that it feels necessary to tip out a busser/bartender/sometimes the kitchen. However, I just started working in a restaurant where we are required to tip out 4% of our food sales to the kitchen, 4% to the bar, and 1.5% to the busser. The problem I have with this is that all of the people mentioned make minimum wage or more and I am paid 3.35/hr. I have been making about $15-40 (one night I made $4 after having to tip out $3) and tipping out the kitchen at least $11 on a SLOW night. I completely understand WHY servers would want to tip out kitchen, but in this case it makes absolutely no sense. As servers, we do hours of kitchen prep work for our own side work (peeling shrimp, portioning chicken/beef/rice/pasta, crumbling cheese...to name a few). Is it even legal to require a server to tip pretty much 30% of their tips? It seems like it has to be illegal just based on the fact that our wages are the only ones adjusted because we are apparently making up for it in tips. 
Wow. First, thank you for writing. You bring up a plethora of issues that seem to affect waitresses and waiters across the county. I would like to address them here, one by one.

Tip Pooling 

It is against federal law to require food servers to share tips with the kitchen or any other back of house employee. Period. If you have to do it, you have a wage theft claim. Please see Fact Sheet #15: Tipped Employees Under the Fair Labor Standards Act (FLSA) on the Department of Labor's websites.

Personally, I would like to debate your opinion that you understand why you should share tips with the kitchen on busy nights. You should never have to. On busy nights when you make a lot of money, save it up to make up for lack of funds earned on slow nights. Is the kitchen sharing their wages with you on slow nights? Why should you have to share on busy nights? If the kitchen doesn't make enough money, they need to take that up with the employer, not with you.

Percentage of Pooled Tips

People have written in to tell me I am wrong about this, but on the federal level, there is no limit to the percentage of tips you may be forced to share with other employees in service positions.

Some states may have more to say about this. I encourage people who say there are legal limits to how much you may be required to tip out to please include the state in which you wait tables. I believe Massachusetts has a clause about a "reasonable" amount, but I have never seen that "reasonable" amount defined beyond whatever is common in the area.

Yes, tips are the property of the tipped employee. As such, the employer may not require the waitress to give him her tips. However, the employer may require tip pooling among front of house employees, which is another way of saying it is legal to force waitresses to tip out bussers, bartenders, and others who have direct contact with customers.

Minimum Wage 

If you are paid $3.35 per hour, you have to bring home enough tips to make full minimum wage. If you are required to tip out thirty percent, but that brings you down to only $5 per hour, the employer has to make up the difference, or let you keep the tips. This is covered in the above-referenced fact sheet under "tip credit." Otherwise, what I said above applies.

Kitchen Prep and Side Work

This one is covered under "Dual Jobs" on the fact sheet. You should not spend more than twenty percent of your time at work doing side work. For example, if you work a 6 hour shift, 1.2 of those hours = 20 percent. Therefore, you should spend 4.8 of those hours waiting tables.

Some specific side work duties are considered reasonable parts of your job; for example, polishing silverware, cleaning the dining room, putting bar glasses away.

When you are required to work in the kitchen doing food preparation, you have a reasonable argument that your employer owes you full minimum wage for those hours. That kitchen work is not directly related to your front of house, tipped labor job.


Based solely upon what you wrote and no other information about your work situation, it sounds as if your employer is breaking numerous laws.

1) You are required to tip out the kitchen, which is illegal. You have a wage theft claim on this one.

2) You are required to perform kitchen work for under minimum wage. If you find yourself spending more than twenty percent of your time performing non-tipped duties, you may have a wage theft claim on this point.

3) I doublt it is illegal for your employer to require 30 percent of your tips go to others; he is breaking the law over who is getting your tips, not how much they are getting. However, if you ever go home with less than full minimum wage, then you have a wage theft claim on this point.

Of course, I am not a lawyer -- just a stupid waitress. ;-D

Best of luck to you!

Tuesday, January 14, 2014

Not Tips, Not Wages, It's About Pay Ratios

I don't usually cross-post things here with articles published at PayScale. However, this is (in my not so humble opinion ;-)) important. Share this with your friends who work in the kitchen. I've often said that it's a bad idea to pit the kitchen against the dining room by paying poor wages to the cooks and letting them feel green over the amount of tip money we make on a good night. Yes, it is illegal to have to tip out the BOH, but I am also talking about the personal/work dynamics the situation causes.

No employee should be encouraged or even allowed to look to other employees (not to mention more vulnerable and expendable employees) for their wages. Some of the other FOH staff should not be depending upon servers to make enough money. Bartenders and hostesses are doing specific jobs for the employer; maybe the employer should pay them better than $8.50 per hour.

Employers pay wages. If your employer has to take the bus to work and has beat-up shoes, he may be telling you the truth when he says he can not afford to pay you more. Forget the shoes; look at what your employer drives.

If we stop getting distracted by minimum wage arguments and start talking about pay ratios we may eventually (am I an optimist?) reverse the problems of the working poor. It's egregious that people work full time for low wages while their bosses are setting six figure salaries for themselves. In the restaurant industry, those same flush bosses expect their waitresses and waiters to compensate other staff.

Forget About Wages, It's About Pay Ratios

Anyone who has ever had a boss plead poverty as an excuse for not giving raises, or even paying living wages, needs to read this article. The United States of America has no regulations regarding the difference between lowest and highest paid employees and CEOs of companies. That means people who pay minimum wages with no benefits to workers are free to set six figure take-home salaries for themselves, and it happens all too often. The fight to reverse this growing gap is starting.
Read more: 

Wednesday, January 8, 2014

Pay Stubs and Tip Outs

Ask the Waitress!
I'm a bartender at a fine dining restaurant in Florida. The servers give up 3% of there total sales, 1.5% to the bussers, and 1.5% to the bartenders. It's automatically deducted out of their checkouts at the end of their shift. I'm told the total 1.5% to the bartenders is divided by the number of bartenders that worked that day, day shifts get day shift tip share and night shift gets night shift tip share.  The issue is this "tip share" is not itemized on our pay stub, so I never know how much tip share I'm getting each bi-weekly pay period. I'm told the servers do not declare their tip share and that it's taxed on my paycheck even though I have no idea how much the tip share I'm supposed to be getting is. Is this a normal practice? Management says this "tip share" is part of the reported tips on our pay stub. I don't understand why it's not itemized separately on our pay stub. Have you ever heard of this practice before?
It sounds like your employer is watching and controlling the tip sharing situation. This is a good thing, in my opinion. Servers are not paying taxes on money they gave to other employees, such as bartenders. Also, the employer is probably paying attention to whether or not waitresses are owed a tip credit. In other words, if they don't make minimum wage, the employer would know that and would supplement their income.

People are only paying taxes on the money they get to keep. That means you, as a bartender, will pay taxes on your share of servers tips.

Your frustration seems to be that the tips you receive from servers are lumped in with your own bartending tips on your pay stub. Therefore, you do not see the difference between what a bar customer left you and what a waitress paid you.

To the best of my knowledge, this is legal and there is nothing wrong. From your employer's perspective, and the IRS's perspective, there is no difference between tips you earned directly (from customers sitting at the bar) and tips you earned indirectly (via waitress tip share.) Tips are tips. Tips are also income, so they get reported and taxed.

A tip is a tip is a tip.

If you want to know because you think you are being stiffed by servers; it sounds as if management is already overseeing server tip outs. If you think the managers are stiffing you... If you have good reason to believe managers are pocketing tip money that belongs to you, you may quietly contact the Department of Labor. But if you don't have any other reason to suspect foul play, please understand that, based solely upon what you describe, your employer is doing nothing wrong, and you have nothing to worry about.

Hope this helps, and thanks for Asking the Waitress!

Monday, January 6, 2014

But Isn't It Strange... More On The Tip Out Debate

 Received a comment this morning on my last post. I would like to respond to his/her questions here.

This whole whether or not to tip out situation is very aggravating. As a manager of a restaurant, I've been at a cross roads with the tip out. When I was a server, I was always told we were required to tip out a certain percentage to both back and front of the house employees. I agree that it was unfair to force me to give a portion of my hard earned money to someone else, especially if I felt they didn't do anything for me. But isn't it also strange that servers only think that it's only the front that makes the restaurant successful? I've worked with other servers who were never at their tables, always short-cut their side work and then complain about everything no matter how much money they made. I've also worked in the back as a cook and can recognize the unfairness in giving money to the kitchen if they really are just standing around doing nothing. But doesn't a great dining out experience require a smooth running restaurant with great food AND great service? I have never forced my employees to tip out to anyone on either side but have given them a choice. If they choose to tip out they only need to tell me how much so that it can be accounted for in their reported tips, otherwise I don't ask or say anything. Is it illegal for me to do that? 

Okay, let's have a conversation:

 This whole whether or not to tip out situation is very aggravating.  I couldn't agree more! :-) And, based upon the number of comments and questions I get on this issue, tons of people agree with us on this point.

required to tip out a certain percentage to both back and front of the house 
Being required to tip out the back of house is against federal law. No state may require it, period.

Regarding "a certain percentage," that is complicated but in most states it is legal. In Kentucky, servers may not be required to tip out; it is voluntary. In Massachusetts, there is language about a reasonable percentage, and "reasonable" seems to refer to some sort of industry standard. It may come into play if most restaurants require 15 percent and one restaurant requires 30 percent. The employees tipping out 30 percent may have a valid (legal) complaint.

unfair to force me to give a portion of my hard earned money to someone else, especially if I felt they didn't do anything for me.
I understand your frustration. The problem is I've seen too many situations when support staff are stretched too thin, then servers complain and don't want to tip them out. Sometimes somebody isn't pulling their weight, but other times they are either in an impossible situation -- and we all know some servers are unreasonable.

But isn't it also strange that servers only think that it's only the front that makes the restaurant successful?
This one sentence is the reason I am turning your comment into a blog post. You are making an unfair and illogical assumption. The fact that the federal government has gone so far (but not far enough) to protect servers from exploitation does not mean that servers do not recognize the kitchen's contribution or accomplishments.

On a side note, I've worked with kitchens that think it's all about them, and I've worked with kitchen staff that appreciate teamwork and cooperation between them and the front of house. But it's beside the point.

The kitchen's envy of server tips is caused in part by a lack of appreciation of what we do, and also in part by employers underpaying them. Kitchen staff who have never waited tables are green with envy on busy nights when our take is high, but on slow nights when we get sent home and they get paid the same, consistent amount of money to make a few dinners they don't give us a thought. I've never had a kitchen employee call me on a slow night in the winter to make sure I could pay my heating bill, but G-d help servers if some kitchen staff sniff money on a good night. (Don't get me wrong; I have worked with some absolutely lovely cooks and chefs -- but I've also worked with some donkey butts. We all have.)

I've also worked in the back as a cook and can recognize the unfairness in giving money to the kitchen if they really are just standing around doing nothing.
Should the kitchen give servers money on slow nights? Depending upon your state, servers make less than minimum wage. So, to be "fair," the kitchen should have to supplement server incomes on slow nights if the servers have to supplement kitchen incomes on fast nights.

I'm not advocating we do this -- I'm trying to point out that it is silly to require employees to pay each other. It is the obligation of the owner to pay people -- and not underpay people.

I've worked with other servers who were never at their tables, always short-cut their side work and then complain about everything no matter how much money they made. 
If that is happening now, you are the manager. You know what to do -- have a private conversation and hold them to the standard of better behavior.

If they choose to tip out they only need to tell me how much so that it can be accounted for in their reported tips, otherwise I don't ask or say anything. Is it illegal for me to do that?
No, your behavior is perfectly legal. I thank you for being smart and responsible enough to not have servers reporting and paying taxes on tips that they paid to somebody else. (That seems to happen a lot.)

For the record, if tipping out is voluntary then the waitress may do whatever she wants. You are not breaking the law, but you should still tread carefully. Let's say some servers choose to tip out the kitchen; others don't. Some cooks start making food faster for servers who tip out. Now, there is pressure on the waitresses to tip out the kitchen. If a reasonable person would say that servers are forced to tip out the kitchen or suffer consequences, you may still find your employer defending himself against a wage theft allegation.

You sound like a thoughtful manager who wants to do the right thing. Thank you for writing your comment.

Wednesday, January 1, 2014

State Specific Questions About Tip Outs and Tip Pools

Happy New Year to all! Hope your 2014 is starting off with a bang and a great start. I am starting my new year with a little research about the thorn in all of our sides: the ins and outs of tip pooling laws.

It's a complicated area of the law precisely because of how difficult it is to spell out and mandate every possible situation in each and every individual restaurant. I think that lawmakers have shied away from this area partly because it's complicated or possibly because they simply don't care.

This came in recently from a fellow restaurant worker in the Cincinnati area:
Happy New Year,
Hello, I recently just quit a quaint bistro and the reason was NO BUSINESS and second I for some reason had to tip pool with the KITCHEN-no way. I have a feeling that this is illegal and only FOH may get my percentage. My question is as follows: Where can I find a list of Tip out rules and procedures for the states of Kentucky and Ohio?
Happy new year to you as well. It is against federal law to require waitresses and waiters to share tips with the kitchen. Anyone with a question about the legality of tipping out the BOH must read:

Against Federal Law


Department of Labor Fact Sheet #15

I would love it if the state governments would make their tip rules and regulations easier to find! :-) However, here is what I found for you:


This page of Frequently Asked Questions applies to all employees in the state of Kentucky. While it does not cover tipped employees specifically, it is still relevant to tipped employees. For example, in Kentucky you are entitled to a ten minute, paid rest break for every four hours that you work.

FAQ Kentucky

and this page tries to explain the state of Kentucky's tip credit:

Kentucky Tipped Employee Minimum Wage. 

According to the Nolo Press, Federal law and most states allow restaurant owners to require servers to participate in valid tip pools. However, this state of Kentucky does not allow employers to require participation in tip pools. Therefore, if you work as a waitress or a waiter in the state of Kentucky, it seems you may legally refuse to tip out other FOH staff.

Nolo Press regarding Kentucky.

The state of Kentucky does allow voluntary tip pooling. I can imagine how that plays out: three servers are asked to tip out a bartender. Whoever refuses has trouble getting her drink orders filled. Or there could be a guilt trip. For example, the employer won't pay the busser more than minimum wage. The employer makes it the responsibility of the servers to compensate the busser.


In the state of Ohio, employers may only take a 50% tip credit. That means that the tipped minimum wage in Ohio must be at least half of regular minimum wage.

In Ohio, you may be required to participate in a valid tip pool. A valid tip pool is one in which only tipped employees participate in. (That is to say, FOH.) The state of Ohio allows employers to require servers to put a portion of their tips into a pool to be divided among other FOH staff.

 The following are two Nolo Press articles you may find of interest:

Nolo Press regarding Ohio

Nolo Press on Tips. 

Best of luck to you, and thank you for Asking the Waitress!