UnderCover Waitress: Tip Sharing Arrangement Seems Unfair

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! ;-))

4 comments :

  1. I think it's wrong for tips to be included as part of any employee's wages. Paying the employees should be the boss' responsibility. When I tip, it's always as a reward for good service. But I suppose if this weren't allowed, Uncle Sam wouldn't get a cut of those tips....

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    1. Not all states allow a "tip credit." No tip credit = tipped employees still have to be paid full minimum wage by the employer. I agree with you; the restaurant industry has taken full advantage of tips and used them to benefit employers, in this case, by allowing them to save money on wages by taking a tip credit.

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  2. It feels like yet another way for the employees to be shafted by employers who want to squeeze that much more money for themselves.

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    1. Yeah, instead of a tip being a "thank you," it becomes the way the employee gets paid. Employers should pay employees.

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