2. Back of the house can’t be included a tip pool.
In a tip pool, all of the restaurant’s tips are put together and divvyed up equally between those that received them. The Department of Labor totally excludes BOH from this practice because of “tip credits”. Tip credits are the legal allowances that let restaurant owners count tips toward their server’s wages.
Tip credits may not be applied to cooks, dishwashers, or runners; these folks must be paid the full minimum wage. Therefore, in the eyes of the Federal government, tip pools are reserved for those that are customarily tipped, because they are customarily paid below the minimum. Equally, this also means that management can never take a cut of the tip pool for themselves.
The unintended outcome of this rule is that those who make the product (cooks, dishwashers) are compensated less than those that sell the product (servers).
3. Actually, not all servers are paid below the minimum wage.
Most states allow tip credits. This means that a restaurant owner can count a server’s tips toward their salary.
California, Montana, Nevada, Minnesota, Oregon, Alaska, and Washington have actually outlawed this custom. So, in these states, servers are paid the state minimum wage in addition to the tips given by customers.
Some restaurants, especially in the states above, have adopted a “no tip” policy altogether. The “no tip” system helps keep wages fair across the restaurant. An employer can take a percentage of the profits and divvy it up to include not only servers, but BOH and others as well.
4. Tips cannot be collected to cover dine-and-dash situations.
According to the Department of Labor, a tip is “the sole property of the tipped employee." Therefore, save for a valid tip pool, a manager can never collect tips, even to cover the cost of an employee mistake, which, in a legal sense, includes:
- cash or cash register shortages
- accepting bad checks
- accepting counterfeit currency
- having a table that walks out
- lost, damaged, or broken equipment
Depending on the state, an owner may have the right to deduct the cost from the employee’s paycheck. To check the policy of your state, see this state-by-state guide to wage deductions.
As a restaurant owner, be sure to fully understand the Wage and Fair Labor Standards Act as well as state laws before making any decisions. If you’re in need of quick advice or an employee contract review, Avvo offers easy legal services related to business formation.
And finally, Mr. Pink’s closing statements in prosecution of the tipping system:
I’m very sorry the government taxes their tips…. That ain’t my fault. It would appear that waitresses are one of the many groups that the government [cheats] on a regular basis. If you show me piece of paper that says “the government shouldn’t do that”, I’ll sign it. Put it to a vote, I’ll vote for it, but what I won’t do is play ball….
He's convinced me. Give me my dollar back!
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