Tip Theft. Does your employer require you to pay for cash shortages? Don’t.

 In Employment Law, Featured, Wage Law

Tip Theft. Does your employer require you to pay for cash shortages? Don’t.

What’s worse than getting stiffed on a tip? Getting stiffed on a tab. Have you ever worked in a restaurant where they had a policy requiring waiters and waitresses to pay for tabs when a customer left without paying? How about where you were required to pay for cash shortages?

If you have ever worked for an employer where either of these things occurred, not only were you a victim of tip theft, but your employer is likely in violation of the federal tipping laws. In addition to being illegal, it’s patently unfair for a restaurant to shift its cost of doing business to waiters and waitresses – many of whom are only paid a direct wage of $2.13 per hour, relying solely on tips to earn a living.

Your Tips are Not YOUR Tips. 

The meager hourly wage that a restaurant pays its waiters and waitresses is all too often a forgotten fact, getting lost in the mix of the restaurant’s greed is the fact that most restaurants pay a subminimum wage. When I remind servers that their employers only pay them $2.13 per hour, I often get corrected that their employer pays them much more than that after accounting for tips. I then must correct the corrector: the restaurant does not pay waiters and waitresses tips – customers do.  Given that restaurants really don’t compensate their employees, it is greedy to think that a restaurant would somehow want to or think that it can somehow convert these tips into their own. Well thankfully, in this setting, the law lines up with common sense – it is illegal for an employer to retain any portion of an employee’s tips.

Imagine a situation where an employer charges its employees for items that total more than the hourly wages earned by the employee; meaning the employee would end up paying the employer for the opportunity to earn tips from customers! Unfortunately, we don’t have to imagine, because it happens, albeit illegally.

Illegal Tipping Schemes

I have seen numerous examples of restaurants and other service-related businesses illegally charging waiters and waitresses and illegally retaining tips. The following are just a few examples of instances where employers were violating the laws by engaging in illegal tip theft:

  • Restaurants illegally charging waiters and waitresses $1 per shift for a “glass-breakage fee” to cover the costs of replacing broken cups and plates.
  • Restaurants illegally requiring bartenders to pay for any cash register shortages at the end of each shift.
  • Numerous examples of restaurants and other service related businesses illegally charging employees for uniforms.
  • A chauffeur company illegally requiring chauffeurs to pay for an iPad that the chauffeurs used to perform their work.
  • A chauffeur company illegally charging chauffeurs for data overages incurred on company-provided data plans.
  • Restaurants illegally charging waiters and waitresses for cash shortages at the end of each shift.
  • Restaurants illegally charging waiters and waitresses credit card fees to process their tips.
  • Restaurants and other service related businesses Illegally charging employees a “house-fee” – this amount is usually based upon the amount of tips earned during the shift or a percentage of the employee’s sales.
  • Restaurants requiring employees to eat meals at the restaurant, where the restaurant makes a profit from the purchase of the mean.
  • Numerous examples of restaurants requiring waiters and waitresses to contribute to a tip pool of which a portion was distributed to back-of-the-house employees or management-level employees.
  • Numerous other examples of employers scheming up plans to retain employees’ tips or charge employees for items that are more properly considered a cost of doing business.

The above examples are not unique to small mom-and-pop restaurants – these illegal schemes to pocket employees’ tips occurs at corporate franchises, up-scale dining, local diners, and every place in between. The amount of money you earn in tips nor the size of the restaurant is any indication of whether your restaurant is following the federal tipping laws. There are numerous examples of national franchise chains committing tip theft and clearly violating the federal tipping laws. Think about it: national chains have the most to gain by screwing their employees out of small sums of money. Small sums of money multiplied over a large workforce, equals a huge sum of money going into the pockets of the corporate man.

Unfortunately, a recent study showed 45% of restaurants illegally included back-of-the-house employees in tip pools; tip theft is something that occurs all too often, but just because everyone is doing it doesn’t make it legal. No matter the venue or the amount of tips earned, these schemes to retain employees’ tips violates federal law and entitles waiters and waitresses to make a claim for significant back wages.

Now what? What can you get?

If it is determined that your employer has violated the federal tipping laws, you are entitled to recover damages in the following amounts:

  • The minimum wage differential multiplied by every hour worked in past two years.
    • Since your employer violated the very law that allows it to pay you at the subminimum wage rate, it has lost the right to pay the subminimum wage and must make up the difference between the subminimum wage it paid and the full minimum wage, multiplied by every hour worked in the past two years. If you are in a state where there is no state law setting a higher minimum wage rate, you would be entitled to recover $5.12 for every hour worked ($7.25 – $2.13 = $5.12).
  • The amount of your misappropriated tips
    • You are also entitled to recover all of the tips that your employer illegally retained from you and any amounts that it charged you for items that are considered a cost of doing business.
  • “Double Damages”
    • You are also entitled to a “double award” in an amount equal to the amount of the minimum wage differential plus the amount of misappropriated tips.
  • Attorneys’ Fees and Costs
    • Finally, you are also entitled to recover your attorneys’ fees and costs that were incurred in pursuing your claim. Luckily, this is what allows my law firm to take these cases on a contingency basis, meaning you will not owe us for any fees or costs unless we obtain a recovery on your behalf. Our fees and costs will never exceed the amount you recover.

Questions? Call the Tip Theft Lawyers: 817-479-9229.

If you have questions about a tip pool, wage deductions, or other questions concerning your pay or employment issues, call the attorneys at Herrmann Law at 817-479-9229 or submit your case online and someone from our office will contact you to discuss pursuing your owed wages. The tip laws are designed to ensure employees are paid a fair wage for their work. However, when an employer attempts to circumvent those laws, you need to call a wage lawyer to help you recover the wages you are owed.

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