Legal Question in Employment Law in California

I'm a server at a restaurant in California. and I have a question about reporting your tips. I know that it is law you have to report all of your tips earned. But I was wondering if it is legal for an employer to enforce and/or punish an employee for not reporting a certain percentage of tips? For example, say after tipping out all the employees (tip sharing/tip pooling the bussers, food runners, bartenders, and hosts) after I have to tip out all those people, I'm making tips that are 12% of my food&beverage;sales. But say my employer is demanding that I claim at least 15% tips of my food&beverage;sales. If I'm really not making the 15% of my food&beverage;sales after tipping everyone out, and I'm really only making 12%, can my employer legally do that? make me claim at least the 15%, even though i'm not making that much? and if so, can they legally enforce that, and/or discipline me for not hitting their imposed 15% standard? if this is illegal or legal on my employers part, what documents in the california labor code state this?


Asked on 10/20/11, 3:12 pm

1 Answer from Attorneys

Unless you are keeping an accurate daily actual tip log on the official IRS form for that purpose (you can find it on IRS.gov), your employer can impose allocated tip reporting on you. The allocation is made according to one of three methods approved by the IRS. If the employer does not require a tip log and does not allocate, they can be held liable for all under-reporting, and they can be audited alone. If they follow the allocation program or require you to do the official log, then they can require the IRS to audit you first and prove under reporting before hitting up the employer for underpaid payroll taxes on your tips. It sounds, however, like your employer may not really understand the allocation program, since it doesn't usually require a full 15% allocation. The IRS provides free tutorials for employers on the proper way to do this. You might ask if they have enrolled in the program and gotten the tutorials, since they could pay less payroll tax and you could have less withholding if they learn the system better.

Read more
Answered on 10/20/11, 4:56 pm


Related Questions & Answers

More Labor and Employment Law questions and answers in California