Who Keeps the Tips: Waitstaff or Owner?

[MGC]

We ran into a situation the other night at a restaurant we frequent regularly. The waitress (who is usually our server, it's not a big place), told us that it was her last night - she's moving to another city. Our service was very good (as it usually is with her), and our normal tip is 20%. When she brought the bill, she told us not to bother with a big tip because the owner always kept the tips anyway. Ok, so we left a substantially lower tip than normal on our credit card, and then tried to give her a cash tip separately. She turned that down.

Here's our problem. Because she's quitting for geographical reasons (or so she said), and also because she turned down the discretely-offered cash tip, I don't think the whole line about the owner keeping the tip was necessarily "sour grapes" brought on by something between the waitress and the owner. We generally tip servers who do a good job well, and it really sits unwell to think that the servers aren't getting the money. Now we're debating whether to go back to this restaurant. I don't know of any way, other than asking another server at the restaurant next time we're there, to find out if this is true, but I also don't like the idea of patronizing a place that may be ripping off its servers.

So, should we return? What would you do?

If it makes any difference, it's in Virginia.

[dvs]

owners & managers shouldn't take tips. thats against industry standard & bad juju...

[BarbaraY]

It may be bad juju but it does happen. Shameful!

[wkl]

somewhere on waiterrant.com there is mention of this very issue. iirc, the restaurant in question was in massachucettes and the servers filed suit and won. sorry, i can't link you to the specific page, but if you search around the site you can probably find it.

[grenouille]

We ran into a situation the other night at a restaurant we frequent regularly.  The waitress (who is usually our server, it's not a big place), told us that it was her last night - she's moving to another city.  Our service was very good (as it usually is with her), and our normal tip is 20%.  When she brought the bill, she told us not to bother with a big tip because the owner always kept the tips anyway.  Ok, so we left a substantially lower tip than normal on our credit card, and then tried to give her a cash tip separately.  She turned that down.

Here's our problem.  Because she's quitting for geographical reasons (or so she said), and also because she turned down the discretely-offered cash tip, I don't think the whole line about the owner keeping the tip was necessarily "sour grapes" brought on by something between the waitress and the owner.  We generally tip servers who do a good job well, and it really sits unwell to think that the servers aren't getting the money.  Now we're debating whether to go back to this restaurant.  I don't know of any way, other than asking another server at the restaurant next time we're there, to find out if this is true, but I also don't like the idea of patronizing a place that may be ripping off its servers.

So, should we return?  What would you do? 

If it makes any difference, it's in Virginia.

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[grenouille]

FYI, restaurants can keep a percentage of all credit card tips, and started doing so at least 15 years ago. It's "justified" by the restaurants having to pay credit card processing fees. In right-to-work states, it's tough luck for the servers. In one major restaurant chain I worked for, the percentage was deducted from the servers' paychecks, and most of the servers didn't even realize what the deduction was for. Tip in cash whenever you can.

[dvs]

in CA gratuities added to the check by the restaurant (for large parties and such) are considered income and therefore the property of the restaurant to distribute as they see fit. Tips freely given to a waiter by a guest are property of the waiter.

[Dave Hatfield]

Solution.

1) Pay servers properly.

2) don't allow tipping.

3) make a one time adjustment to pricing to compensate.

That's how it is in France, Germany, The Nederlands and Scandanavia. It works.

(you may leave a small, and I mean small, amount of change for especially good service.)

[Mikeb19]

owners & managers shouldn't take tips. thats against industry standard & bad juju...

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Why shouldn't owners and managers take tips? I've worked in fine dining restaurants where the servers are walking with more than the Executive Chef or the General Manager.... I've known servers pulling in 60 grand plus per year (per job) for 20 hours of work a week.

[KatieLoeb]

The owner should be reported to the local labor board and brought up on charges. I have no doubt he's paying substandard below-minimum wage hourly wages on the presumption that the servers will make it up in tips. Except that they aren't seeing their tips. He's a scumbag and a thief and being a server is not an indentured position. He needs to be reminded of that with a heavy fine and some bad publicity.

Managers are generally on salary, but I don't see a problem with them getting a tip for "finding" a table on an otherwise crowded night, or for allowing folks to BYO and waiving the corkage fee or some other act of kindness toward a guest that is above and beyond normal exceptional service. They shouldn't get into the habit of having that happen, but it's usually only occasionally anyway.

Owners should never accept tips. Period. It's bad form.

[dvs]

owners & managers shouldn't take tips. thats against industry standard & bad juju...

←

Why shouldn't owners and managers take tips? I've worked in fine dining restaurants where the servers are walking with more than the Executive Chef or the General Manager.... I've known servers pulling in 60 grand plus per year (per job) for 20 hours of work a week.

←

and, i've known servers who make a whole lot more...

but for the most part, the management (foh & boh) should be in it for the love of the job. yep, you've got to be pretty farking looped to leave a serving/bartending position for a mgmt one, but some of us indeed are and take on the extra responsibility in the hopes of gaining more knowledge about the biz to then take that information and go & open our own places.

in all of my mgmt positions i've made well below what the servers & bt's made. and even when i received a side tip for something, i've handed it off to the bussers or hosts or whoever was the party more deserving of the tip.

i hope to open my place next year.

[Miami Danny]

The owner should be reported to the local labor board and brought up on charges.  I have no doubt he's paying substandard below-minimum wage hourly wages on the presumption that the servers will make it up in tips.  Except that they aren't seeing their tips.  He's a scumbag and a thief and being a server is not an indentured position.  He needs to be reminded of that with a heavy fine and some bad publicity.

Managers are generally on salary, but I don't see a problem with them getting a tip for "finding" a table on an otherwise crowded night, or for allowing folks to BYO and waiving the corkage fee or some other act of kindness toward a guest that is above and beyond normal exceptional service.  They shouldn't get into the habit of having that happen, but it's usually only occasionally anyway.

Owners should never accept tips.  Period.  It's bad form.

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Sorry, but I think you jumped the gun a little. According to federal law (each state is different, some better, some worse), owners are not required to pay tipped employees more than 1/2 the minimum wage, and if employees' tips make up the other half, that's all they may be entitled to. I'm not saying that's right, that's just how it is. My employees make a LOT of money on some nights, and not as much on others. That's the life of a tipped employee.

Also, as the owner, if my wife is waiting tables and I'm behind the bar, should we refuse tips? Are you insane? Tipping is part of the process, regardless of who gets it, although I agree that owners should not take tips intended for others. Although you may not be aware, but, ordinarily, waiters tip out busboys, barbacks, cleaning people, etc.

In addition, when Maitre D's "find" a table (for a fee), or "wiave" a corkage fee, or bartenders give away drinks in order to pump up the tip, they're basically transfering the wealth from the owner to themselves. I'm not saying that's right or wrong, but think about it from an owner's point of view. An $80 tab with a $20 tip just became a $50 tab with a $30 tip. Or people may not come back because they've been made to feel they need to 'buy' a table on their next visit. The idea that all it's all the noble servers working for greedy owners is simplistic. But I also agree that the best way to avoid this is to tip cash (especially when you're tipping $20 on an $8.49 tab, because the bartender bought you three drinks. It's less suspicious!)

[Darcie B]

Sorry, but I think you jumped the gun a little.  According to federal law (each state is different, some better, some worse), owners are not required to pay tipped employees more than 1/2 the minimum wage, and if employees' tips make up the other half, that's all they may be entitled to.  I'm not saying that's right, that's just how it is.  My employees make a LOT of money on some nights, and not as much on others.  That's the life of a tipped employee. 

Also, as the owner, if my wife is waiting tables and I'm behind the bar, should we refuse tips?  Are you insane?  Tipping is part of the process, regardless of who gets it, although I agree that owners should not take tips intended for others.  Although you may not be aware, but, ordinarily, waiters tip out busboys, barbacks, cleaning people, etc. 

In addition, when Maitre D's "find" a table (for a fee), or "wiave" a corkage fee, or bartenders give away drinks in order to pump up the tip, they're basically transfering the wealth from the owner to themselves.  I'm not saying that's right or wrong, but think about it from an owner's point of view.  An $80 tab with a $20 tip just became a $50 tab with a $30 tip.  Or people may not come back because they've been made to feel they need to 'buy' a table on their next visit.  The idea that all it's all the noble servers working for greedy owners is simplistic.  But I also agree that the best way to avoid this is to tip cash (especially when you're tipping $20 on an $8.49 tab, because the bartender bought you three drinks.  It's less suspicious!)

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I don't think you have interpreted federal law correctly. You must pay a tipped employee at least $2.13, and you must make sure that the tips they receive at least make up minimum wage for each pay period. Also, all tips earned by the employee must be retained by the employee except for valid tip pool arrangements. No state law can pay less than the federal law (that's why they call it the "minimum" wage), although they may be more generous.

Minimum Wage: Covered non-exempt workers are entitled to a minimum wage --$5.15 an hour effective 9/1/97. Wages are due on the regular payday for the pay period covered. Deductions made from wages for items such as cash shortages, required uniforms, or customer walk-outs are illegal if the deduction reduces the employee's wages below the minimum wage or cuts into overtime pay. Deductions made for items other than board, lodging, or other recognized facilities normally cannot be made in an overtime workweek. Tips may be considered as part of wages, but the employer must pay not less than $2.13 an hour in direct wages and make sure that the amount of tips received is enough to meet the remainder of the minimum wage.

Food Credit: The employer may take credit for food which is provided at cost. This typically is an hourly deduction from an employee's pay. However, the employer cannot take credit for discounts given employees on food (menu) prices.

Tips: Tipped employees are those who customarily and regularly receive more than $30 a month in tips. Employees must be informed in advance if the employer elects to use the tip credit, the amount of tip credit to be claimed, and the employer must be able to show that employees receive at least the applicable minimum wage when wages and tips are combined. Also, employees must retain all of their tips, except in the case of valid tip pool arrangements.

(from the DOL website)

[K8memphis]

In TN, the merchant must pay tax on the tips.

I totally grieve for my kid who is just out of culinary school (read: paying off big school loans) and works his a$$ off in the back of the house and the people in the front of the house take their money home in buckets. large overflowing buckets by comparison.

Not to worry though, he is wisely building his career brick by brick. But I am a Mom after all.

[johnnyd]

i hope to open my place next year.

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Charge your camera and start a thread about it. We want in!

P.S. Always tip in cash - if it's really busy, I deliver it personally to the waitperson.

[Mikeb19]

owners & managers shouldn't take tips. thats against industry standard & bad juju...

←

Why shouldn't owners and managers take tips? I've worked in fine dining restaurants where the servers are walking with more than the Executive Chef or the General Manager.... I've known servers pulling in 60 grand plus per year (per job) for 20 hours of work a week.

←

and, i've known servers who make a whole lot more...

but for the most part, the management (foh & boh) should be in it for the love of the job. yep, you've got to be pretty farking looped to leave a serving/bartending position for a mgmt one, but some of us indeed are and take on the extra responsibility in the hopes of gaining more knowledge about the biz to then take that information and go & open our own places.

in all of my mgmt positions i've made well below what the servers & bt's made. and even when i received a side tip for something, i've handed it off to the bussers or hosts or whoever was the party more deserving of the tip.

i hope to open my place next year.

←

True. A server working 50 hours a week in a couple good restaurants can pull in 6 figures...

The management should be in it for the love of the job... Is that a joke? Why not take it a step further and work for free? Why should a college student who doesn't give a @#$% be making more money than someone who's devoted their life to the business/art? And if you're not making money, how are you supposed to have the capital to open your own restaurant?

I've cooked in some VERY good restaurants (ie. rated as the best in this region by local media as well as magazines and critics), and while it was fun serving up fresh white truffles, caspian sea caviar and goose foie gras, it gets old real quick when I'd go back home to the 'hood and could barely afford to put food on my own plate... I'd have a drink of a thousand dollar wine with my chef at work but when I was at home I was drinking malt liquor... The restaurant trade is probably the only business in the world where the most skilled workers get paid the least. (I actually felt bad when I was making more money than the sous-chef, and I was making garbage coin myself...)

That's why I'll be opening my own place in the next couple years, and all I can say is I'll be damned if a server is going to be making more money than me...

Edited September 5, 2006 by Mikeb19 (log)

[dvs]

owners & managers shouldn't take tips. thats against industry standard & bad juju...

←

Why shouldn't owners and managers take tips? I've worked in fine dining restaurants where the servers are walking with more than the Executive Chef or the General Manager.... I've known servers pulling in 60 grand plus per year (per job) for 20 hours of work a week.

←

and, i've known servers who make a whole lot more...

but for the most part, the management (foh & boh) should be in it for the love of the job. yep, you've got to be pretty farking looped to leave a serving/bartending position for a mgmt one, but some of us indeed are and take on the extra responsibility in the hopes of gaining more knowledge about the biz to then take that information and go & open our own places.

in all of my mgmt positions i've made well below what the servers & bt's made. and even when i received a side tip for something, i've handed it off to the bussers or hosts or whoever was the party more deserving of the tip.

i hope to open my place next year.

←

True. A server working 50 hours a week in a couple good restaurants can pull in 6 figures...

The management should be in it for the love of the job... Is that a joke? Why not take it a step further and work for free? Why should a college student who doesn't give a @#$% be making more money than someone who's devoted their life to the business/art? And if you're not making money, how are you supposed to have the capital to open your own restaurant?

I've cooked in some VERY good restaurants (ie. rated as the best in this region by local media as well as magazines and critics), and while it was fun serving up fresh white truffles, caspian sea caviar and goose foie gras, it gets old real quick when I'd go back home to the 'hood and could barely afford to put food on my own plate... I'd have a drink of a thousand dollar wine with my chef at work but when I was at home I was drinking malt liquor... The restaurant trade is probably the only business in the world where the most skilled workers get paid the least. (I actually felt bad when I was making more money than the sous-chef, and I was making garbage coin myself...)

That's why I'll be opening my own place in the next couple years, and all I can say is I'll be damned if a server is going to be making more money than me...

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get ready to be dammed and i *do* hope you're not planning on making up the difference by taking tips from the staff

[Darcie B]

In TN, the merchant must pay tax on the tips.

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That's incredible. I am assuming they have to pay TN income tax on the tips, or do they have to pay some sort of employment tax? I don't understand the logic of that one - how did that get through the legislature? And I thought WV had some wacko taxes...

All the more reason to tip in cash, directly to the waitstaff.

[Kouign Aman]

I think your suggestion of asking another server about the restaurant's tipping policy is a good one. It makes sense to verify before giving up a place you enjoy, calling the law on someone, etc.

I've been mad enough at a boss to forgo one night's tip income in order to make his life harder.

[dvs]

In TN, the merchant must pay tax on the tips.

←

That's incredible. I am assuming they have to pay TN income tax on the tips, or do they have to pay some sort of employment tax? I don't understand the logic of that one - how did that get through the legislature? And I thought WV had some wacko taxes...

All the more reason to tip in cash, directly to the waitstaff.

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in CA the house & the server are taxed on the tips. a SF restaurateur took the case all the way to the supreme court & lost.