Wage theft is a serious issue that largely affects hourly workers. Those who depend on tips or customer gratuities are often very vulnerable to wage theft. Employers denying them overtime wages or the hourly pay that they deserve could create real financial hardship.
There are many different types of wage theft that occur. Companies can manipulate workers into doing part of their jobs without pay. Other businesses intentionally alter payroll records to reduce what they pay workers. For those working in a profession where customers provide tips or gratuities, wage theft related to their tips may be a concern. Is tip pooling potentially a form of wage theft?
What is tip pooling?
To determine whether tip pooling is a violation of fair pay laws, workers first have to understand what tip pooling actually is. At some businesses, owners or managers require that everyone who receives a gratuity combines those amounts. Then, at the end of a shift, everyone will receive an equal portion of those tips. Some companies view this as the fairest way to manage tipped professionals. Others use it as a way to increase the pay that those who perform certain secondary services, like hosts, bartenders and bussers, receive from each shift they work. After all, their contributions affect the customer experience and therefore the total tips that customers pay.
New York does allow tip pooling provided that employers manage it in a transparent and reasonable way. However, there are certain actions that would likely constitute wage theft. For example, if a manager who receives a salary or a business owner demands a cut of the tips, that is likely wage theft. So is charging each worker a fee for tips received via credit card payment.
Workers may also have some concerns about scenarios in which one or two low-performing coworkers drag down the average gratuity for the entire shift and deprive people of the money they earned by providing excellent service. Workers who keep a close eye on how much everyone collects in gratuities and how much management pays out, as well as who receives a portion of the tips, may have an easier time identifying cases in which tip pooling may actually constitute wage theft.
Fighting back against inappropriate pay practices can compensate workers who deserve the money that they have earned through their labor. Seeking legal guidance is a good way to get started.