Is Your Employer Violating The Law By Not Paying Gratuities Earned By You?

A few months ago we published a blog post about employees who are paid by the hour -- particularly low wage workers -- and who are often cheated by their employers.  We pointed out that hourly workers are routinely denied proper overtime pay and are often paid less than minimum wage according to a newly released study based on a survey of workers in New York, Los Angeles and Chicago.

But what about workers who are not being paid their tips, even though their employers are charging customers a mandatory gratuity for various services?  Unfortunately, many employees do not realize that they are entitled to receive all, or a significant portion, of gratuities charged by employers to their customers.

Indeed, there are millions of workers in the USA that rely on tips for most of their income, and there are well over two million businesses that rely on tipped employees.  According to recent statistics from the U.S. Department of Labor, food and beverage service-related workers held 6.5 million jobs in 2000 alone.  The U.S. Department of Labor estimates in a 2001 study that tips and gratuities may account for well over $5 billion per year being left on plates and tip trays and financed on credit cards.

But let's face facts.  Relying on customers' tips for your income is tough.  The average customer doesn't realize how difficult and hard the average waiter, waitress, hair dresser, concierge, cab driver, maitre de or bartender works for their money.  Dealing with and satisfying the general public is one of the most demanding jobs around.  Many, if not most, tipped employees have a tough time making ends meet.

So if your employer is withholding gratuities that you’ve earned, you may have a case under The Fair Labor Standards Act ("FLSA").  The Act mandates that gratuities earned by an employee but collected by an employer must be turned over to the hard working employee whom earned it.  If your employer is not doing so, you may have a basis to file a class action suit to recoup the tips earned by you and all other workers at your work site.  Employers who do not manage and properly account for the gratuities earned by their employees and who do not properly pay their employees tips that they have collected on behalf of their workers may in fact be violating the law.

 If you believe that your employer is withholding gratuities that you’ve earned, please contact us to discuss your legal options.

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Comments (9) Read through and enter the discussion with the form at the end
Patricia - September 18, 2011 9:22 PM

My employers are distributing my gratuity on weddings and banquest..to pay the cooks who are told to NOT clock in when their are banquet parties...they than tip the dishwashers, and whoever else they feel like that day..also as a waitress shouldnt i be making at least minimum wage on days i recieved no tips?

Marcos Munoz - February 16, 2011 5:22 PM

My girlfriend works for a hair saloon and they find reasons to keep her tips untill payday. She also beleives they do not give the full amount that she earned from the tips. what should she do?

Alexsandra - July 20, 2010 12:46 PM

That is me i work overtime because my boss does not allow me to take a lunch, he some how disappears when its my lunch time and he never pays me any of that time also i have dealt with clients on weekends and didnt get paid for that either. My hours are suppost to be 8-5pm mon-fri but it seems like i am on call 24hrs and i have no benefits or luch- also i work with all men and it doesnt help when my boss talks about having sex with women 10ft away from me

Matt - July 18, 2010 4:58 PM

I have a question about my job. I work for a pizza place delivering pizza's. When I was hired I signed a fairly small contract. I am considered an independent contractor and not an employee so I do not receive payment from my employer. All I receive is $2.50 for every delivery plus what the customer tips me. I was wondering if this is legal? Thank you.

risikesh - July 18, 2010 12:44 PM

(1)After how many years of service employer pay gratuity?

(2)what is the gratuity amount base on salary?

Gamecock - June 16, 2010 3:37 PM

My recent employer was negotiating the gratuity up front on the contract with his customers and putting it on the contract as gratuity. When i drove the limo, the customers assumed the tip was already included in the contract. My employer would not pay the gratuity to the driver. When challenged on this the employer claimed that gratutity was not the same as tip. I got tired of arguing with him about it and moved on. He has since reminded me of a non-compete agreement signed before employment and now i'm in a delimma as to whether i can seek other work in this field. What can i do?

Law Help - April 29, 2010 3:15 AM

if your employer is withholding gratuities that you've earned, you may love a slip under The Beautiful Fight Standards Act ("FLSA"). The Act mandates that gratuities earned by an employee but composed by an employer moldiness be upset over to the tough working employee whom earned it. If your employer is not doing so, you may person a component to enter a categorise action proceeding to recompense the tips earned by you and all opposite workers at your work position. Employers who do not deal and right calculate for the gratuities attained by their employees and who do not right pay their employees tips that they love composed on behalf of their workers may in fact be violating the law.
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Angel - April 7, 2010 8:48 PM

I have been working for my mom's business for the past 17 years. For year's, she would pay me when-ever she wanted, and what-ever amount she wished. I get paid commission on all student's that I register. I work Mon.-Sun. from 6am-11pm. I dont even get paid by the hour on extra work I do. I dont get paid any over-time, and have never received a pay increase. I have 3 number's that I answer (by myself) I handle all the East and West Coast call's. In my contract, it states that she has 10 days to pay me. I dont get paid, unless I register people. Right now, she owes me $6,700, and at the end of April, the amount will be over $10,000. It seems like I have to beg for my money,and she goes around telling family and friends that she is paying my bills. Out of the $6,700 owed, she just paid me $1,000- stating that she is trying to catch up, but its hard when she owes so much. I am paying bills late, paying late fee's, and the only thing she says is that I'm going through the same thing. What should I do??????????

jen - February 22, 2010 4:30 AM

i wonder if this is valid in washington state where tips are not considered part of an employee's wages? i am having this exact issue with my very recently seperated employer. they would keep part of my tips every pay period. what is weird is that before they paid me i would get a print out of the tips i had made in that pay period, but that number would never match the number in the "net tips allocated" line on my pay stub. one week it said on the tip print out that i had made 247 in tips and on the check stub for the same pay period it said that i had only made 197 in tips....any advice anyone? what can i do?

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