Employer Taking Tips Away As Punishment

My question involves labor and employment law for the state of: Utah

I work at a restaurant where all employees get paid over minimum wage plus tips gained through the pay period. Cash tips are collected via a tip jar placed on the counter where orders are placed and credit card tips are collected via a tip screen presented to customers when they are paying. Tips are split between all the employees. The manager has recently been threatening to deduct pay from our tips as a punitive measure as they are implementing changes in the restaurant. Is this legal?

My understanding of FLSA law is that that withholding tips from employees is illegal, but I've only seen references to situations that involve employees who make less than minimum wage. I also am of the understanding that we are tipped employees. We make more than $30 per month via tips and they are reported to the IRS.

It sounds illegal. First, tips are not to be pooled among ALL employees. Only the service personnel. Cooks, chefs, dishwashers, and janitors are not eligible to participate in employer mandtated tip pooling, nor may the employer retain any part of the tip pool money (though they can deduct the credit card processing fee from those tips).

I'm not clear what you mean by "deduct pay from your tips as a puntiive measure." If you mean he's going to keep the money himself, that's illegal. If it means that he's going to lower your base pay (not below $2.13) and augment it with your tips to bring you up to minimum wage, that is legal.

Of course, it's illegal.

Your tips are YOUR money, your income, your earnings. He has temporary possession of your tips in trust for you.

He'd be stealing your money just as if he was stealing your wallet.

I'm sure that there is something in the statutes that address that but I don't have time to look them up. You can find all the statutes listed here:

http://laborcommission.utah.gov/divi.../ualdlaws.html

Or call the labor commission and ask for citations.

Even without wage laws he'd still be stealing your money under the criminal code.

If he makes good on his threat, you file a wage claim:

http://laborcommission.utah.gov/form...aimsforms.html

Make sure all of your fellow employees know this and make a joint effort to push back on the threat. If only one of you squeaks you're likely to get fired.

It's impossible to tell from how he worded it if it is illegal or not. No the employer can't keep tips (I said that). But if he's lowering the hourly pay so that the tips make up the difference between the hourly rate and the minimum wage, that is NOT illegal.

From what I see, it isn't illegal to do what is happening or threatened.

http://www.martindale.com/litigation...PC_2198964.htm

since the employee recieves at least minimum wage from the employer federal and state law allows the employer to distribute or retain the tips as they desire, including retaining them for themselves. The key is the op is being paid minimum wage. That takes the tip issues and laws out of the equation.

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Quoting jk

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From what I see, it isn't illegal to do what is happening or threatened.

http://www.martindale.com/litigation...PC_2198964.htm

since the employee recieves at least minimum wage from the employer federal and state law allows the employer to distribute or retain the tips as they desire, including retaining them for themselves. The key is the op is being paid minimum wage. That takes the tip issues and laws out of the equation.

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I'm sorry, but that's wrong. It is a violation of both Utah and Federal law for employers to retain tips (other than to withhold the credit card processing charge on tips paid by credit card). It is a violation of Utah law to pay non-service personnel from pooled tips. The Utah law specifically disallows the employer himself or people such as "cooks, chefs, dishwashers, and janitors," from receiving money from pooled tips.

What is legal that I have stated and what you're partially aludiung to is that the employer is allows to credit the tips againt the hourly pay of the worker provided the employee is getting at least $2.13 and the tips received brings that up to the applicable minimum wage ($7.25).

While the original poster claimed it was "punitive" it appears that it is just new management changing the rules (which they are required to inform the employees of before implementing). His wording is nebulous but while the tips are required to be paid, the hourly pay can indeed be decreased by the amount of the tips received (as loing as it stays above $2.13 net).

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Quoting flyingron

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I'm sorry, but that's wrong. It is a violation of both Utah and Federal law for employers to retain tips (other than to withhold the credit card processing charge on tips paid by credit card). It is a violation of Utah law to pay non-service personnel from pooled tips. The Utah law specifically disallows the employer himself or people such as "cooks, chefs, dishwashers, and janitors," from receiving money from pooled tips.

What is legal that I have stated and what you're partially aludiung to is that the employer is allows to credit the tips againt the hourly pay of the worker provided the employee is getting at least $2.13 and the tips received brings that up to the applicable minimum wage ($7.25).

While the original poster claimed it was "punitive" it appears that it is just new management changing the rules (which they are required to inform the employees of before implementing). His wording is nebulous but while the tips are required to be paid, the hourly pay can indeed be decreased by the amount of the tips received (as loing as it stays above $2.13 net).

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Read the link.


and op stated they are being paid in excess of minimum wage so there is no need to utilize the tip credit rules.

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Quoting jk

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From what I see, it isn't illegal to do what is happening or threatened... since the employee recieves at least minimum wage from the employer federal and state law allows the employer to distribute or retain the tips as they desire, including retaining them for themselves. The key is the op is being paid minimum wage. That takes the tip issues and laws out of the equation.

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While the Brueningsen court did find that "an employer is not prohibited from retaining an employee's tips if the employer does not take the tip credit", and insisted that it is applying the statute as written, other state courts have found otherwise, and the Department of Labor has similarly stated that the tips are the property of the employee and are thus not subject to being taken by the employer. Other states have also rejected the Brueningsen's court conclusion that common law remedies (such as unjust enrichment) are preempted (a portion of the Brueningsen decision that seems exceedingly poor in its reasoning).

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Quoting flyingron

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I'm sorry, but that's wrong. It is a violation of both Utah and Federal law for employers to retain tips (other than to withhold the credit card processing charge on tips paid by credit card). It is a violation of Utah law to pay non-service personnel from pooled tips. The Utah law specifically disallows the employer himself or people such as "cooks, chefs, dishwashers, and janitors," from receiving money from pooled tips.

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To the extent that Utah's regulations apply, it does not appear that they were raised by the plaintiffs in Brueningsen.

The OP has the misfortune of being in Utah, where a federal trial court has issued a ruling that weighs in favor of the employer, but it seems that an objection could still be raised through the state department of labor or, potentially, state courts under Utah's own regulations, pending further clarification of the issues by the appellate courts (if and when that happens).

As stated in my link, cumbie v. woody woo appears to show the courts essentially eliminates the application of tip related laws as long as the employee is paid at least minimum wage. Given that it involved a Utah case, it becomes even more difficult to argue the law is in favor of the op here.

Also as stated in my link;

The Woody Woo decision binds courts within the Ninth Circuit (CA, WA, HI, OR AZ, MT, ID and AK).


I do see it is an incorrect decision and wonder how it could be applied in states such as California that have specifically codified that tips are the property of the employee they were intended to be given. It is a gift to the employee. Personally I cannot see any basis for an employer to ever claim any right to a tip intended for an employee. Of course that also means I disagree with a tip credit allowance at all since a gift, even if due to activities associated with employment, are simply not wages (although they are legally reportable income)

But apparently greater minds don't agree with me.

Cumbie stands for a different proposition, which is that an employer that does not take a tip credit can include employees who would otherwise be excluded from sharing tips in a tip pool. It's also in no way decisive on issues of Utah law, and provides no support for the 'preemption' argument in Brueningsen. The outcome in Brueningsen was not required by Cumbie.

I agree with the states that have rejected Brueningsen's preemption argument, as nothing in the FLSA can reasonably be said to change the nature of a tip or the intent of a person leaving a tip. The situation is a bit different when there is a tip jar and tip sharing, but even in that context it's difficult to concoct a theory under which the person leaving a tip would be okay with an employer pocketing part of that money to punish the employee for something unrelated to the service for which the tip was given.

But to the extent that you're reiterating that Brueningsen is a problem for employees in Utah whose employers don't take a tip credit, certainly it's a very significant impediment to any effort to get relief through the federal system, and it's not clear from any authority I can find to what extent Utah's state agencies and courts have opted to follow its lead when applying state law.

Just because a person was appointed to the federal bench doesn't mean that his brain is greater than yours, even if his words carry much greater legal significance within his jurisdiction. :cool: