What Happens If Your Employer Takes Your Tips?

If you work in a tipped position -- like as a restaurant server, delivery driver -- you may have simply assumed that your employer has a right to collect or keep a portion of the tips you receive from customers. However, in some cases this behavior can lead to major civil consequences, and you could have the right to obtain your back pay (as well as damages) from your employer. Read on to learn more about the situations in which an employer is not permitted to take your tips, as well as what you can do if you feel you've been a victim of this practice.

When can your employer keep your tips?

Tips were originally designed as a bonus meant to supplement a salary; but for many, tips make up the vast majority of their weekly pay. And in most states, employees who earn tips are allowed to be paid well below the state's minimum wage, with the idea that tips will increase this salary so that it is at least equal to minimum wage. Employers are permitted to deduct the difference between the hourly rate and minimum wage as a credit against their payroll taxes, even though they don't actually pay this wage.

Because of this arrangement, employers are not able to keep any portion of the tips an employee receives, unless the employer has established a valid tip pool among multiple employees. If your employer regularly keeps some of your tips -- even just a dollar or two -- and doesn't participate in tip pooling, this violates the law.

What should you do if your employer has been unlawfully keeping your tips?

If you feel your rights have been violated, you'll want to consult an attorney who specializes in wage and hour law to sue under the Fair Labor Standards Act (FLSA). This attorney will be able to write a demand letter to your employer, asking that they provide you with any money lawfully owed. If your employer doesn't respond, your attorney will file a lawsuit in court to ask a judge to grant you these funds.

These wage and hour claims operate separately from any immigration or other civil claims -- so if you have a pending judgment or are fearing deportation if you file a lawsuit with a hispanic attorney, don't worry. Some courts have held that undocumented immigrants are still entitled to back pay and damages under the FLSA. Because your lawsuit helps end abusive practices for other employees, as well as for yourself, the federal government is generally not interested in deporting those who file lawsuits to end wage and hour abuse.


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