Do I Have The Right To Know Where My Tips Go?

Do I Have The Right To Know Where My Tips Go?

Many hospitality workers rely on tips as their main source of income and restaurants make up the bulk of the employers who hire them. The Fair Labor Standards Act (“FLSA”) allows an employer to pay its employees a reduced hourly wage if they make enough in tips to bring them to the level of minimum wage. The maximum amount of “tip credit” an employer is allowed to take is $3.02/hr.

Many restaurants have policies that servers must share their tips with other employees such as bussers and bartenders. Policies which require mandatory sharing of tips is proper if the person who gets a taste of the server’s tips normally receives at least $30 in tips monthly and whose job description entails contact with the customer.

Becoming more and more popular is the practice of pooling tips for the entire restaurant and then distributing them based on a points system. The idea behind a “pooled restaurant” is that the service will be better since everyone on the floor is participating in the tip the customer leaves. A majority of “pooled restaurants” require that all of the tips (including cash) be deposited with the house so they can be tallied and then distributed, usually at a later date. Some states require that the entire staff must agree to be pooled. Others states such as Florida have no laws whatsoever and employers are free to make the decision without any employee input. But if the house is in charge of the tips, some in cash, how does everyone know there is no funny business going on?

The number one question I get from prospective clients is “Do I have the right to know where my tips go?” My answer is, Yes. However, just because you have that right doesn’t always mean you can exercise it easily. I am not aware of any method, other than a lawsuit, that a tipped employee can use to exercise their right to know.

Sure you could always ask for an accounting from the manager or owner, but without the monthly income reports there would not be any way to verify the amounts were even close to being accurate. It should be easy to verify the credit card tips, but what manager is going to hand over all of the restaurant credit card receipts for you to add them up? And what about the cash tips? I know of several pooled restaurants that only accept cash. Why they do this I am not exactly sure, but I have pretty good idea why (IRS?) and you expect the employees to trust them not to steal from them?

The only idea that I can come up with to solve this problem is an amendment to the laws which regulate the industry and/or the FLSA. If a business such as a restaurant wants to be pooled then make them register with a local or state government agency and pay a yearly fee. The agency can then require the business to inform its employees of the policy in writing and act as an overseer should there be an issue with the distribution of tips.

I plan to put together a group of like minded persons and begin a non-profit lobbying group. The group’s main purpose will be to author and then propose legislation to our local, state, and federal government representatives to secure the rights of hospitality workers throughout the United States. The first area of concern will be the transparency of tip collection and the allocation of those tips in pooled restaurants.

I have spent many hours over the last few weeks trying to come up with a name for the “cause.” Please feel free to suggest a name. You can email me your suggestions to me at lowell at kuvinlaw.com  If your name suggestion is used, you will receive a permanent acknowledgment on the website.