Can an employer take your tips?

Question

My neighbor has a problem with her employer who takes all their tips (fastfood outlet). No employee is allowed to take any of the tips as he takes it all. He clear out the jar himself or expects them to record tips at the end of the day and give it to him (at register closing). He even takes all the credit card tips, they have never seen it. He uses the excuse that he will tip the staff that he feels deserve it. So far he has'nt given anyone any tips and they know he uses the tips to pay for their wages. Is this legal? What can they do? If they take the cash tips he tells them they are stealing. The previous manager tried to change the system and gave them their tips twice- he got fired! The owner just says that it is not their money, even if the customers put the tips in your hand, it is expected to put it in the jar. He has video cameras with video tapes and when not in the shop he will check the videos to see if any tips has been taken. ALL tips must go to him? Can he be stopped?

Thank you everyone that has answered so far. All answers has been great. As my neighbor has no internet she read the answers only today (at my place). Further to all answers- they all work as casuals, gets paid an hourly rate, this is a franchise-owner business who sells fast food and no one has agreed or signed any contract that he can take the tips. New casuals are not informed of this and it is only when someone takes their tips that they are being told it is company money and of stealing. The customers definitely tips the staff for service. P.S. He has a big staff "turnover"... and have I mentioned that except for her being older (21) the staff is generally under 18? Maybe he knows that kids are not that "world wise" or is it "business wise"?

Answer 1

Call your state labor board and ask. They can tell you what the law says.

Answer 2

Each time somebody tips, just let them know that the tips goto the management. That way the word will get around that the tip jar or tips are strictly for management. People will be less likely to tip if they know its not going to the person they had planned it to go. This could be a lawsuit because in a seance its deception, fraud. People tip for a service, they pay for the product first.

Their is a China food place down the street that when you pay with cc/debit. The print out has a line for tips, I tend to tip in that line because I want that business to stay in business.

Answer 3

if company policy states that employees are not allowed to recieve tips then yes her employer is allowed to take the tips. they must have physical proof that they are being paid out of their tips before they can open a lawsuit against the owner or employer. however, if the business is privately owned, and all exiting employees sign a confidentiality agreement there is nothing that can be done because the testimony of past employees is inadmissable in court. my sugesstion is to call the better business beaure (bbb) and find out exactly what can be done according to state laws.


if most of his staff is under 18 then thats his main reason for taking their tips. they dont have much experience and for many its their first job; the last thing they want is stealing to go on their resume. in that case your friend should definitely find out what they can do about losing their tips because theyre being cheated and she doesnt want him getting away with it.

Answer 4

If there is a published policy or if there was an employee orientation session in which company policy was spelled out to not include tips, then this is legal.

I agree, however, that the practise sucks and the employee should arrange for an "anonymous" call reporting the employer to the IRS.

While it might be legal, it ain't right!

Answer 5

1.I would start with the HR department of the corporation.
2. She could call the PD and report it as theft. I would have another job lined up. If this is true he is stupid enough to fire her for that too.
3. If he fires her for #2 that could be the same as winning the lottery.

There are tax issues too. Tips on a credit card would be placed on that employees wages per IRS rules, if he is taking the money and they are paying the tax we have the beginning of tax fraud.

If he is not claiming the money as income the IRS would be more than happy to dig their spurs into him. They have a "tip" line. No pun intended. They prefer getting big fish but ya neva know.

Answer 6

If you do not claim the tips for taxes, then the employer can take them, usually about 18% of your total sales, however if your employer is taking all of the tips, make sure a good Samaritan calls the IRS and informs them that tips are being collected, and you, being a great red blooded American want to make sure that your employer's contribution to the war effort is equal to his actual earnings.

Answer 7

Any employer can place conditions of employment on workers. Including sequestering tips as long as they are not considered part of basic compensation and he is paying at least minimum wage.

Your friend can quit. Eventually the word will get out and he will not be able to hire decent employees.

Answer 8

sounds like a bad dream, jobs are hard to come by.its best to keep your job. and when your in charge do the right thing!