Tip Theft, Wage Theft and Illinois Law

We are experienced Illinois attorneys who since 2001 have helped thousands of people with wage and compensation issues. We have handled many cases successfully dealing with tips and underpayment of wages. Contact us any time to speak with a lawyer for free.

The Fair Labor Standards Act establishes rules for tipping employees, the largest being that tips are the sole property of the employee who received it. Every state has established a minimum wage for tipped and non-tipped employees. Unfortunately, it is common that tips don’t always make it to the correct person, or they are withheld from them. There are two different ways in which employers steal their employees’ tips: tip theft and tip credit/tipped minimum wage.

Tip Theft

These are cases in which management and employers find excuses to steal workers’ tips. This can look like several circumstances, one of which is confiscating tips. This could be employers telling employees that they aren’t allowed to accept tips but then pocketing them for themselves.

Another is illegal tip pools which could either be paying non-tipped workers’ wages with the earnings from the tip pool or paying workers from the tipped workers’ tip pool. Those could constitute either sharing tips with chefs, cooks, or expeditors or merely paying their wages with the tip pool.

Another circumstance is when management skims, part, or all tips and claims to use them for other purposes like charity events, employee meals, bills, etc. Even if it’s well intentioned, it’s illegal. Additionally, employers are not permitted to require tip sharing with themselves, managers/supervisors or other employees who don’t usually receive tips or aren’t doing work that results in tips being earned.

Employers are not allowed to deduct the credit card processing fees from the tip amount left on an employee’s bill. Otherwise stated, employers may not make the servers pay the full credit card company charge.

Tip Credit/Tipped Minimum Wage

Tip credits allow employers to pay a tipped worker lower than the minimum wage as long as the tips bring their earnings to the minimum wage amount. Employees’ wages must reach minimum wage when tips are added and if they don’t, employers are most likely required to cover the difference.

Employers may not pay an employee at tip-credit rate but then not allow them to retain all their tips earned. Employers also may not allow performing non-tipped work when the wage rate is tip-credit.

Additionally, requiring employees to perform non-tipped work without raising their wages to non-tipped wages is illegal. Non-tipped work may include cleaning restaurants, washing dishes, setting up for an event, etc.

Employers may not schedule employees to work a shift as a manager but pay them as a server tipped to minimum wage. Employers may not take tip-credit against employees when they work, especially when the non-tipped work is sufficiently distinguishable from tip-generating work both in nature and time of work performed.

Employers may not have an employee working at tip-credit rate when more then 20% of their time working is on non-tipped work or duties. These duties may include attending meetings, washing dishes, opening, or closing the restaurant when it is impossible to earn tips. If an employee spends too much time on duties that don’t allow tips, they are charged for “walk-off” charges. These deduct from wages or tip breakage. Essentially, an employee being forced to do too much non-tipped work are charged from tips or wages at an unreasonably high cost of customer credit card charges.

What Next?

If some of these scenarios remind you of your own workplace, it is highly recommended to immediately start documenting in detail your wage and tips as well as tip-pooling. It’s possible you may have a lawsuit which could be a remedy to recover the money you and/or others are owed. If you have any questions, please call us any time at 312-346-5320. We help with tip theft and wage cases all over Illinois. All calls are free and confidential and there is no commitment if you don’t want to proceed. In addition, every attorney we work with on these cases is contingency based which means there will be no fee unless you win.