YSK under US Labor Law, 100% of tips have to be paid to workers. It's illegal for employers to take your tips.

As someone who has managed and an owned restaurants for 20+ years, I have known operators who do this. A common denomiator amoung the operators who do this is..short sightedness and stupidity. It creates an accounting nightmare that quickly spirals into a overly complicated mess. If an operator is taking tips from one group to subsidize another but not actually paying out the exact amount, they are creating an income that has to be accounted for. This will create a headache for the operator's CPA and an easily discovered in an audit that then leads to a whole pandoras box of tax, insurance and labor law violations.

The most straight forward way to tip out BOH is to simply distribute the exact amount collected from FOH. Collect $XXX in tip out from FOH, pay $XXX to BOH.

On the other hand, a restaurant that is tipping out BOH is perfectly within their rights to offer BOH a lower base rate (so long as it is at least minimum wage) in exchange to a piece of the tip out. The potential employee is also perfectly within their rights to refuse such an arrangement.

/r/YouShouldKnow Thread Parent