UnderCover Waitress: Bad Changes With New Ownership

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!


  1. Once again, I'm reminded of why I couldn't make it as a server. If I didn't walk out on my own, I would have been fired. Just couldn't keep my mouth shut with this kind of employee abuse!

    1. Sing it, sister! :-) I hope they all walk out together, leaving him stranded with not FOH employees.

  2. Wow. I'm appalled. Beyond appalled. I hope the Labour Department goes to town on this guy. He deserves to have his life taken apart by overly eager officials with no patience for excuses.

    1. Lol -- "overly eager officials..." you just described our IRS auditors, which should also get all over this guy. :D


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