Can A Restaurant Own Its Employees' Tips?
Many have heard of the recently reported $5 million settlement reached in the case against celebrity chef Mario Batali wherein his employees claimed Mr. Batali violated the Fair Labor Standards Act by skimming the wait staff’s tips equaling as much as five percent of the daily wine sales. The employees claimed they were told that their tips were being taken to pay for the restaurant’s wine selection and to cover broken glassware. The Washington Post's Michelle Singletary wrote a good article on the story.
So, is "skimming" tips in Colorado legal? In fairness, let's not use the word "skimming," but rather, "owning." The answer is – YES. Let’s take a look at when and how an employer can claim ownership of an employee’s tips.
Colorado wage law (C.R.S. § 8-4-103(6)) allows for an employer to assert claim to, right of ownership in, or control over tips only if: the employer posts a printed card at least 12 inches by 15 inches in size with letters one-half inch high in a conspicuous location at the place of business. The card must contain a notice to the general public that all tips or gratuities given by the patron are not the property of the employee, but instead belong to the employer. If the employer does not post a printed card detailing tip ownership as described above, the employer may not exert any control over cash tips designated for an employee.
So, in order for an employer to claim ownership of an employee's tips, they must follow specific guidelines and post conspicuous notice informing patrons (and employees) that any tips given are the property of the employer. While it may not seem fair for an employer to take tips from its employees, it is legal.
Laszlo & Associates, a Boulder, Colorado based law firm, provides legal counsel to for-profit and non-profit businesses on a variety of business needs including corporate formation, employment law, risk management, corporate protection and legal compliance.