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Credit card tip withholding and deductions from cash tips, is this legal?

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  • Credit card tip withholding and deductions from cash tips, is this legal?

    I work at a high volume restaurant in Massachusetts. This is the first place I've worked that the employer withholds all credit card tips and distributes it through a separate pay check each week in addition to my hourly check each week. Any credit card payment that'll charge the company a fee will be deducted from my tip!!

    Also, at the end of each shift the manager fills out a slip with my total sales and writes below 5% of my sales then that amount is taken out of my cash tips and given to the Expo. She also deducts 5% of my alcohol sales for the bartender. If there is a buser I'd have to pay 8% of my total sales. I don't have an issue tipping my coworkers when they "help" but I've absolutely done 99% of the work because the expo and busers go out of there way not to help me. Why do I have to automatically pay a set percentage from my tips I've earned? I'm paid $2.66/hr while they're paid $9 an hour plus all the waitresses deducted tips. On average I work 6hrs a shift and the buser&expo will help for only 3 hours.

    I received my training pay check. I worked 11.50 hours at $9.00 an hour.= $103.50
    Underneath is says declared tips $16.00 and then *deductions* $16.00.

    Gross Pay $119.50 FICA $9.13. F.I.T $.05.
    Net Pay $94.32

    With the tax deductions it should of been $110.32 that's $16 difference. I haven't declared any cash tips yet and won't report them until the end of the month. So I haven't received the $16 tip? I don't understand.

    Is this all legal?

  • #2
    Federal Law rules on tipped employees

    And state law
    I post with the full knowledge and support of my employer, though the opinions rendered are my own and not necessarily representative of their position. In other words, I'm a free agent.


    • #3
      Elle provided some great links about federal and state law, so I am going to go with it from more of a procedural point of view.

      Based on what you posted, from a payroll perspective, you are being taxed on the $16 worth of declared tips by adding it to gross pay and then deducting it out. Were the $16 tips on a CC or were they cash tips that you declared? If they were cash, did you take that home the same night? If so, you already got the $16 on the night(s) you earned them.

      As an employer who deals with CC chargebacks, I can understand holding CC tips to make sure they "clear" the process. It would be very easy for an employee to defraud an employer really quickly over a few nights before the patrons ever saw the fraud. This holdback protects the employer from that just a bit and it is possible the restaurant doesn't keep enough cash on hand to payout all the CC tips.


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