Counter Tips

Any sufficiently advanced technology is indistinguishable from magic.

It started with the tip jars. I can almost see a tip jar at a coffee shop where orders are customized to each customer and can get quite complicated. But tip jars proliferated. I see them as Subway where dropping pre-packed meat on bread might not happen correctly.

Most counter workers are paid at least minimum wage. This separates them from tipped employees. Tipped employees can be paid as little as $2.13 an hour. Amazing. While discussing should the minimum wage be $7.70, $10.00, or $15.00 an hour, the person who brought you breakfast at IHOP is making $2.12 and hour. The reasoning is pretty simple, if you are in upper management at some place like Red Lobster, TGI Fridays, the National Restaurant Association or one of their "concerned" legislators. If you paid a tipped employee minimum wage, they would make too much money. Stand in front of a mirror and say this out loud. "If I were paid minimum wage, I would make too much money."

I am not talking about the $2.3 million paid to a middle of the road back up short stop. I am not talking about the bonus paid to a bank executive whose bank needed Federal bailout money. I am not even talking about a below average doctor having to make do with a three year old BMW. I am talking about someone whose employer and both the federal and state goverment think are not worth $5,000 a year.

But back to the tip jar or "counter tips."

The Fair Labor Standards Act really makes it quite clear. If you make more than $30 a month in tips, tips are the property of the employee.

Tips are the property of the employee.

This would include employees involved in a tip pool. There are sit down restaurants who use tip pools. A tip pool is completely legal provided:

  • It is a written agreement.
  • The members of the pool customarily receive tips.
  • Does not include employees who do not customarily receive tips.
  • Never includes the employer.

Owners and managers should never have their hands in the tip jar or counter tips. Putting counter tips in the till to "balance out the drawer" is the same as taking the tips.  Owners/managers in the tips is illegal and actionable. Contact your state's department of labor or a google labor lawyer your state.

All of this is covered in Fair Labor Standards Act Fact sheet #15.