Can My Boss Take My Tips?

Restaurant workers in Ohio rely heavily on the tips that they make to supplement their income. Tipped workers can legally be paid less than the federal minimum wage, as long as they earn enough in tips to make up the difference. When an employer steals a worker’s money through tip skimming, it makes a big difference in the worker’s annual income – sometimes bringing their pay below minimum wage.

Is Tip Pooling Legal? Can My Boss Participate in a Tip Pool?

The most common situation where a boss illegally takes a worker’s tips is through tip pooling. Tip pooling occurs when an establishment collects all tips that are made in a day, puts them into a pool, and splits it among all staff members at the end of the night. The tips are usually shared among not only the waiters and servers but bartenders, hosts, cooks, bussers, and dishwashers, as well. 

Tip pooling is legal under state and federal law. Under the Fair Labor Standards Act (FLSA), however, these tips are considered the property of the employee who received the tip – not the employer. An employer cannot share any tipped employee’s tips by participating in a tip pool. Employers cannot directly take a worker’s tips in any way under federal law. 

Is it Ever Legal for My Boss to Keep My Tips?

The Fair Labor Standards Act regulates tips in the U.S. In 2020 and 2021, the Department of Labor updated the tip regulations to expressly prohibit employers from keeping employees’ tips. The law does outline specific circumstances, however, when an employer can take a partial credit against the obligation to pay its employees minimum wage based on the amount of tips received. The updated law states:

• An employer lawfully cannot keep an employee’s tips under any circumstances. Managers and supervisors cannot keep tips received by employees, including in tip pools.
• An employer that pays full minimum wage and does not take tip credit may allow workers who are not tipped employees to participate in the tip pool.
  
• An employer that collects tips to put into a mandatory tip pool must redistribute each worker’s share of tips within the pay period.
• An employer that has a mandatory tip pool and does not take a tip credit must keep payroll and records that track how much each employee receives in tips.

In general, employers cannot take or keep tips in Ohio or anywhere in the U.S. Employers are not permitted to withhold tips or deduct a worker’s wages based on the number of tips earned. There is an exception, however, when the manager or supervisor directly receives a tip from a customer for services that the manager or supervisor rendered. 

What Do I Do if My Boss Is Taking My Tips?

If your employer, boss, manager, or supervisor has been taking your tips, illegally deducting your wages based on tips earned, or participating in a tip pool without receiving tips directly from customers for his or her own work, you may be eligible for financial compensation. Here’s what to do:

1. Document the issue. Keep careful records of how much money you made in direct tips or through tip pooling, how much you earn as your regular pay, and how much your boss has been taking from your tips.
2. Submit a complaint to the U.S. Department of Labor. The Wages and Hour Division enforces the FLSA. They can investigate your situation and offer solutions.
3. Contact an attorney to file a private lawsuit against your employer. If your lawyer successfully proves that your boss breached the FLSA, you can receive back wages and liquidated damages, plus money for legal fees and court costs.

The FLSA and state law in Ohio protect employees from losing their tips to their employers in most scenarios. For assistance navigating these laws and pursuing the financial compensation that you deserve for illegally taken tips, contact the Cleveland wage and hour lawyers at Scott & Winters Law Firm, LLC.