I Think My Employer May Be Stealing My Tips Or My Hourly Wages From Me
After 25+ years in the hospitality business, and almost a decade as a hospitality attorney in Florida, I have put down what I think are several very important ideas about how employers may be “shortchanging” their restaurant employees.
I look forward hearing from you on any ideas or question you m
Reason #1: Because The Servers Are Making More Money Than The HouseThere are very few businesses that are as easy to start and are as profitable as a restaurant. However, restaurant owners are not always making more that the service staff. If you group together the amount of tips the service staff is earning, the amount of tips can easily dwarf what the owners are making in profits. Simply look at the percentage tip you earn each night. When I was waiting tables if I made less than 18% (before tipping out) I had a bad night. And remember, I wasn't alone; at the last restaurant I worked at, there were 39 other servers on the floor earning tips.
If the service staff is earning 18% in tips and the restaurant grosses $5 million for the year, the tips earned from the revenue could easily be $900,000. However, the restaurant needs to pay rent, wages, social security, insurance premiums, as well as the cost of the goods sold even before they can think about a profit for the year. Remember, the owners have also put up a sizable capital investment to open the restaurant and they expect to get their investment back. It's not uncommon for restaurant owners to believe that the "uneducated service staff" is making a lot more money than they are and without any risk of loosing their capital investment. It's exactly then (usually in the second or third year of operation) that a manager, bookkeeper, owner, or investor, suggests that the restaurant can be more profitable if some of the "expenses of doing business" are passed on to the service staff.
Reason #2; Tips Paid To You At The End Of Your Shift, But Recorded On Your PaycheckIf you work in a restaurant where the tips you earn are paid to you at the end of the shift, you need to keep track of how much you are making each night, and how much you are tipping out. We recently had a client come in and show us his paycheck stubs where the employer was declaring more tips than the server was actually making. We thought, why on earth would the employer do that?
After several hours of research and speaking with a couple of restaurant managers who are friends and still in the business, one of them confided in me that he had worked for a restaurant where the owners were doing exactly the same thing. He explained one of the reasons he quit working for the restaurant was because the owner was declaring more tips than the servers had made in order to hide (wash) the cash receipts the restaurant was bringing in. He also explained that the burden of paying taxes on the tips would be the server's responsibility and not the restaurants. I asked him "don't the servers complain about the tip amount being wrong on their paychecks?" He responded, "Most of the servers work here for six or seven months and then move on to the next job; no one has complained yet, I'm not sure they even know it's an issue."
It is an issue, and one that every server needs to be aware of when it comes to getting paid. Make sure you keep track of the numbers; how much you earn in tips each shift, how much you tip out, and how many hours you worked.
Reason #3: Managers Deserve Free Drinks, Right?The IRS counts tips as wages, and nobody works harder for their wages than restaurant service staff. Many restaurants require servers to share a percentage of their tips with other service staff such as service bartenders, bussers, and food runners. However, some restaurants require servers to participate in a "tip pool" where the tips are pooled together and then distributed to all of the service staff based upon a points system. As a part of the nightly/weekly pool, salaried managers collect the tips and then divide the tips and distribute them either in cash or on your paycheck. However, service staff that participate in the tip pool never get an accounting of the tip distribution and sometimes unscrupulous managers decide they deserve a few free drinks at the "after work watering hole" and appropriate service staff tips into their own pockets.
I was once told a story about a unscrupulous manager who would take a dollar out of the $100 pack of $1 bills that made up the bar bank. When he was finally caught, they estimated that he had stolen over $1000 over the period of several months. The bartenders didn't catch on because no one ever bothered to count the bundles of $1 bills.
The only people who can police management are the owners of the restaurant. It can be easily argued that if management is stealing from the service staff, it won't be long till they start stealing from the owners/restaurant. Every restaurant should have a strict set of rules and accounting standards that make sure managers are being honest and not exposing the restaurant to liability for unpaid wages/tips.
Reason #4: Labor is ExpensiveAs mentioned above, there can be issues with managers who are paid a salary - a fixed amount each week. When managers handle server staff tips, some may be inclined to cut themselves in for a portion of your hard earned money while owners look the other way. Some managers earn bonuses depending on the restaurant reaching certain goals such as keeping food and liquor cost and labor percentages below a certain level. Keep track of the number of hours you work each week, you just might find out you are missing "time" because "labor is expensive."
Salami Slicing is term we use to describe what happens when tiny amounts of time (or tips) are shaved off the number of hours you work each week. The story I like to tell is about a man who walked into a butcher shop and asked the butcher to give him one of the salamis hanging behind the counter. The butcher declined, but offered the man a slice to taste. The man came into the shop every day for the next few weeks and took a piece of the salami with him to "taste." At the end of the month the man had the entire salami in his home.
During a case involving a very well-known restaurant I found that the Restaurant had deducted a half-an-hour from the number of hours each server was working each day. The Restaurant used a computer time clock, like many do today, that kept track of the time in 100th of an hour, not in minutes (60th). After looking for anomalies in the time records I came across an employee who had clocked in at 18:00 (6:00 pm) and clocked out at 23:59 (11:59 pm) but had only recorded 5.50 hours of work. I ran the other employee time records numbers through a computer program and discovered that when a service staff employee worked more than four hours, the system deducted a half-an-hour. When I shared the information with the Restaurant's attorney, he explained that the computer system is programed to deduct the half-an-hour because of the half-an-hour breaks the service staffs take. Service staff breaks? I can see it plain as day - "Excuse me sir, I hope you are enjoying your meal, I'm going to take my half-an-break right now and I'll be back soon." I'm not sure what restaurant that attorney visits, but after 25 years in the business I never got a 30 minute break after four hours on the floor.
Keeping track of the time you work is very important to making sure you are being paid for every minute you work. I use to keep a small book in my car and would write down the time I clocked in, the time I clocked out, and the amount of tips I earned and how much I tipped out. Now with the smart phones, keeping track of your time and tips is even easier and can be done after each table leaves.