Can an Employer Keep Your Tips?

Generally, no.

Under the FLSA, an employer generally cannot keep employees’ tips for itself.

That includes situations in which an employer:

• • • • • Takes a percentage of employee tips
        • Requires employees to surrender part of their tips
        • Uses employee tips to cover operating expenses
        • Diverts tips to owners
        • Places management in an employee tip pool
        • Withholds tips that should have been distributed

There is an important distinction involving managers and supervisors.

A manager or supervisor may generally keep a tip that a customer gives that person directly for service the manager or supervisor directly and solely provided. That is different from allowing the manager or supervisor to receive a portion of a mandatory tip pool containing other employees’ tips.

Because the distinction can depend on the circumstances, the way your employer structures its tip system matters.

Who Can Participate in a Tip Pool?

Who may participate in a tip pool depends in part on whether the employer takes a tip credit.

When an Employer Takes a Tip Credit

Mandatory tip pools generally must be limited to employees who customarily and regularly receive tips.

Depending on the circumstances, this may include:

• • • • • • • • • • • • • Servers
                        • Bartenders
                        • Bussers
                        • Service bartenders
                        • Other traditionally tipped employees

Managers and supervisors generally cannot receive tips from a mandatory tip pool containing other employees’ tips.

When an Employer Does Not Take a Tip Credit

When an employer pays employees at least the full federal minimum wage directly and does not take a tip credit, federal law permits certain broader mandatory tip pools.

Depending on the circumstances, employees such as cooks and dishwashers may participate.

However, the employer still cannot keep employees’ tips, and managers and supervisors generally cannot receive tips from a mandatory tip pool.

The employer’s wage structure and the identities of everyone participating in the pool should be examined together.

Common Illegal Tip Pool Violations

Employees may encounter illegal tip pooling in many different forms.

Potential tip pool violations include:

• • • • A manager receiving a share of employees’ pooled tips
      • A supervisor taking money from a mandatory tip pool
      • An employer retaining part of the tip pool
      • An employer using tips to pay business expenses
      • An employer using tips to compensate management
      • Improperly including employees in a tip pool when the employer takes a tip credit
      • Failing to distribute pooled tips properly
      • Taking a tip credit without satisfying applicable requirements
      • Failing to ensure tipped employees receive the required minimum wage
      • Improperly calculating overtime for tipped employees
      • Retaliating against employees who question tip practices

These violations can sometimes occur without employees realizing that anything is wrong.

For example, an employer may have a written tip-pool policy that appears legitimate but still operate the system improperly in practice.

The fact that an employer has a written policy does not necessarily mean the policy complies with federal wage law.

What Should You Do If Your Employer Takes Your Tips?

If you believe your employer is stealing tips or withholding tips improperly, start preserving information about how you are paid.

Keep copies of records such as:

• • • • • • • • • • • • • Pay stubs
                        • Time records
                        • Tip reports
                        • Credit-card tip records
                        • Tip-pool policies
                        • Employee handbooks
                        • Written instructions about tip sharing
                        • Text messages or emails concerning tips
                        • Schedules
                        • Records showing who participates in the tip pool
                        • Communications with management about missing tips

If possible, keep copies of important records somewhere you can access them outside your employer’s systems.

You should also document what happened while the details are fresh. Write down:

• • • • • • • • • • • • • How the tip pool operates
                        • Who contributes to the pool
                        • Who receives money from the pool
                        • Whether managers participate
                        • How much you are required to contribute
                        • Whether tips are withheld
                        • How you are paid directly
                        • Whether you receive overtime
                        • When you first noticed the problem

Do not assume that an employer’s practice is legal simply because other employees have accepted it.

If the arrangement appears questionable, a Georgia wage-and-hour attorney can review the facts and determine whether additional investigation is warranted.

How Tip Theft Can Lead to a Wage Claim

Tip theft may involve more than the loss of individual tips.

Depending on the circumstances, employer withholding tips can affect whether an employer properly satisfies minimum-wage requirements or is legally entitled to claim a tip credit.

For example, when an employer takes a tip credit, the employee’s direct wages plus qualifying tips must satisfy the applicable minimum-wage requirement.

If the employer’s tip practices cause an employee to receive less than the required amount, the employee may have a potential wage claim.

Tip violations can also overlap with overtime violations.

An employer may incorrectly calculate overtime, misclassify an employee, improperly apply a tip credit, or make deductions that reduce wages below legally required levels.

That is why a potential employer tip theft claim should be reviewed as part of the employee’s entire compensation structure.

For related wage-and-hour issues, see our Georgia Wage & Hour Attorney, Overtime Pay Violations, Employee Misclassification, and FLSA Claims pages.

When Should You Contact a Tip Theft Attorney in Georgia?

Consider speaking with a tip theft attorney in Georgia if:

• • • • • Your employer keeps part of your tips.
        • A manager or supervisor receives money from your tip pool.
        • You are required to share tips with employees who may not legally participate.
        • Your employer uses employee tips to pay business expenses.
        • Your employer withholds tips from your pay.
        • Your employer refuses to explain how tips are distributed.
        • Your employer deducts unexplained amounts from your tips.
        • You believe your employer is improperly taking a tip credit.
        • Your direct wages and tips do not add up to the required minimum wage.
        • You believe tip violations are affecting your overtime.
        • You complained about tip practices and experienced retaliation.

You do not have to determine whether your employer has violated every technical requirement of the FLSA before contacting an attorney.

If management is receiving employee tips, your employer is withholding money you earned, or the tip-pool rules do not make sense, have the arrangement reviewed.