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Using Tips To Pay For Temp Workers Nevada

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  • Using Tips To Pay For Temp Workers Nevada

    I work in a restaurant where the tips are automatically added to the guest check. They are then collected by my employer, put into a common pool, divided and paid out evenly on a per hour basis on our paychecks.

    For years, my employer commonly uses temp workers from (a temp agency) to help staff, especially during large parties or special events. My employer has cut back our staff considerably and has relied more and more on these temp workers, rather than hire more full time or part time employees.

    The reason they do not hire additional workers is because they are fully paying the temp agency directly with our tips, deducting them from the tip pool. So, basically it is us workers who are paying for these temps and the employer gets "free" help, without having to pay wages, taxes and benefits.

    My question is simple: Is this legal? Can they use our tips to pay for temp workers? What law would apply?

    I have never heard of an employer doing this before.

    Thanks in advance for you attention.
    Last edited by cbg; 12-01-2008, 04:22 PM.

  • #2
    http://www.dol.gov/esa/whd/regs/compliance/whdfs15.pdf

    Service Charges: A compulsory charge for service, for example, 15 percent of the bill, is not a tip. Such charges are part of the employer's gross receipts. Where service charges are imposed and the employee receives no tips, the employer must pay the entire minimum wage and overtime required by the Act.
    "Reality is that which, when you stop believing in it, doesn't go away".
    Philip K. **** (1928-1982)

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    • #3
      Thanks for the response, but I am not sure that what that has to do with what I am talking about. The 15% charge is a gratuity and is stated that way. It is also distributed that way.

      My question is can the employer pay a temp agency out of that tip pool?
      Last edited by Jerry6656; 12-01-2008, 05:30 PM.

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      • #4
        You can call it a gratuity, you can call it a bus, but if the amount is added to the bill automatically, it is a service charge as DAW cited. In order for it to be a "tip", the amount (or even whether or not to leave a tip) must be determimed solely by the customer. The cite has everything to do with your situation.
        I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

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        • #5
          Thank you DAW and Patty for your help and clarification.

          I have read the Act and I agree that a Compulsory Service Charge is not a tip. At some hotels there is a Compulsory Service Charge for room service. It is stated that way and I think most people know that it is not a tip. Another example would be something like a delivery charge for a pizza, which also is not a tip.

          But, if it is stated that it is a "gratuity" on the charge and the employee tip pool is credited the whole amount of this charge, would that not qualify it as a tip?

          I mean, at some point, using the same logic you gave me Patty, if it is called a tip and it is treated like a tip and it is distributed like a tip to the tip pool, would it not be a tip, even though the employer may call it a "bus"?

          If it quacks like a duck...

          Another consideration would be that, if indeed the employer is utilizing this statute of the act and calling it a "service charge" and indeed as the Act says, it is part of their "gross receipts", it would be taxed as such. But, in reality, they do not claim them as such. The taxes are paid by the employees as part of their payroll when it is distributed.

          It would seem that the Act did not envision this sort of behavior on the part of the employer. Even in the example that DAW posted. I think that example came from an employee who's employer charged a service charge and the employee thought that they should receive all or part of it as a tip. In our situation, the employees already receive that money, so I am conflicted about if it does indeed apply in this case, especially when there is an established tip pool.

          I know we can go round and round about this, but it is something to think about.

          Thanks again for taking the time to give some perspective on this matter. I do appreciate it.

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