Paying credit card tips via payroll checks instead of the customary practice of paying out at the end of each shift

I have heard that some employers are considering paying tips added on credit cards via the company's regular payday cycle in paychecks instead of the usual and customary practice of paying these tips out in cash at the end of each shift.

In light of all the restaurants failing and leaving employees empty handed on the outstanding pay checks for hours already worked, is this practice evolving to enable restaurants to "float" the cash from these credit card tips for the period of the pay day cycle like a temporary loan from tipped employees?

Have you experienced this practice?

Have you lost tips and wages because your employer closed their doors?

Your thoughts as a restaurant professional on this practice?


Views: 4116

Tags: tips, cards, credit, fohboh, gratuities, payday, restaurant, waiter, waitersworld, waitress


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Comment by Giuseppe De Carlo on May 18, 2011 at 8:54pm

Hi Paul, I know I sometime get carried away, but as you know about me I am there for the employee, as long as their complaints are justifiable.

In regards to the above question?

The restaurant may not have cash every night, or may want to draw a checque once a week for all the tips, which is reasoable and legal, having said that the servers have aright to write down theyr nightly tips and expect the full total at the end of the week. (maybe minus bank charges?) As we both know there is not that much profit in acrued tips whithin say 7 days. Giuseppe

Comment by Giuseppe De Carlo on June 24, 2010 at 3:47am
Hi Giuseppe, WOW I have never heard so many problems about tips as ther are in America, I must tell you, you have some very good arguiments below, Paul knows about me and tipping, im my restaurant I have never had this problem, because around 60 - 70% were credit cards, the rest cash, I paid tips nightly.,America is a cashless society, this may prove a problem with cash on hand, having said that, yes the restaurant is purchasing his product with your money, but legally you cant force him to draw money everyday to pay tips, unfortunatelly you have no option but to get all your tips on payday. The propitor has a right to take the bank fee out, thats all, I know this will not sutisfy everyone, unfortunatelly thats how it is. Look at the bright side, getting extra money once a week, may have adventiges for you.
Comment by Julie Rogers on May 25, 2010 at 9:50am
Having worked for tips most of my life, I personally, would not work under that type of system. It is one of the best benefits of this type of work. I did work at a very high end restaurant that had this process, for one day only. I had not been made aware of this in advance. I can see both sides of the coin, particularly in restaurants where almost all checks are paid by CC. The owner has to keep cash in advance of his payments arriving. It does, however, in most cases force the employer to take social security payments out of the tips and the employee would not be liable for both his and the employers part at the end of the year, which is what happens when you have to declare them yourself. So that is about a 7.5% saving to the employee if they are on payroll instead of off, and that same amount as a cost to the business. For me though, this is almost as bad as tip pooling, another thing I rarely will participate in, with some exceptions.
Comment by Meghan E. Jones on May 19, 2010 at 9:54pm
This is the EXACT issue that I am having a challenge with at work. Just like Pat Jack, I believe that credit card tips should be paid out at the end of each shift, or taken out as they are processed, and NOT HELD until payday (where inevitable discrepancies occur). I have been searching in vain for a legal precedent as to WHY an employer would NOT want to pay out the tips that BELONG to the employee on the DAY that they earned the money. And get this! I even consulted a legal website and 3 different attorneys told me that the employer had EVERY right to withhold the tips until payday but when I asked for proof, they could not cite their references and basically said, "That's just the way it is and you have to accept it." Well, NO, I DON'T have to accept it because it is morally and ethically wrong and I believe my rights are being violated. Nobody (so far ) has been able to tell me or show me in writing WHY we can't get our credit card tips DAILY. If there is a LAW I'd like to read it because I will FIGHT to get the law changed. This is a very sensitive issue at my place of employment and many servers are suffering terribly due to the postponment of desperately needed credit card tips. Please note, I am not trying to disparage my employer with this post and it should not be construed as such. Rather, I am searching for justice and trying to right a wrong. We WORK for tips. We NEED our tips. We EARN our tips. And to answer Paul Paz's question above, YES, many of us HAVE lost tips resulting from the "weekly" payment method due to the volume of tracking and discrepancies in record keeping. I personally keep track of EVERY credit card tip I earn, AS I earn it, to ensure I am paid accurately. Documentation is key w/CC tips and ALL earnings. This is BUSINESS. Thank you.

Comment by Pat Jack on March 3, 2010 at 1:30am
I worked at Commanders Palace in New Orleans and at Andrea's Northern Italian Seafood in Metairie for some years. Both of these restaurants are considered to be amongst the finest in the greater New Orleans metropolitan area. Andrea's was even rated 5-stars for many years.

Retaining the credit card tips of employees for disbursement on payroll checks is and has been standard procedure at these two restaurants for many years.

In my opinion there is absolutely no reason for retaining these tips that has any ethical or moral basis. It is an underhanded and scheming practice to say the least.

The tip given to a server is the servers money and anybody who argues with this is simply making a criminal argument so as to rationalize the theft of the money. It is also the co-mingling of funds, the co-mingling of employee funds with corporate funds, it has all sorts of implications in a civil court of law and all bad for the corporation.

When you take money that is meant for another person it is theft. 'nuff said.

If the money meant to be payment for a service rendered is put on a credit card ... and you take that money and claim ownership and control over that money ... it is BANK THEFT and BANK FRAUD ... a federal felony, a state felony, etc ..., etc ...

So why do servers tolerate it? Because they face reprisal from the employers in the form of termination and blacklisting if they complain. So why do New Orleans authorities and officials allow it? So why do many, many restaurants do this? Because they do and nobody wants to fight them on the issue.

Of course the restaurant is floating the money and using the server's tip money to carry out the business of the restaurant, that's the entire reason for keeping the money for two weeks.

It's just another scam perpetrated by employers in the food and beverage business on what they see as a helpless segment of their employee population. It causes nothing but problems and anamosity between employee and employer. It's absurd and just another CRAZY INSANE problem you run into in the food and beverage business.
Comment by Teri Rogers on February 10, 2010 at 3:47pm
We have an old fashioned system of accounting for tips. Each employee is encouraged to keep track of their daily tips by keeping their server checkout slip for each shift worked.
We cash a check once a week for the previous week. Each employee has an envelope with their name on it that is kept locked up in the office. We write the day/date and the amount of tip for that shift and place in the envelope. Each server must then initial each entry to ensure accuracy and receipt of monies.
So far, this has been a good system. If there is a mistake, we catch it then and there.

Comment by Paul Paz on February 10, 2010 at 9:15am
Thbere have been some good discussion on this. I was impressed with the argument that receiving gratuties in via the company payroll reduces the daily temptation of staff blowing the very tempting cas aquired every shift. The flip side.... businesses must be transparant with how the tips are accounted for to eliminate any possible errors or theft.

Comment by Paul Paz on February 5, 2010 at 8:31am
@Emerald... interesting point of the absence of accuracy (I'm being polite) between the records of the empoyee and employers.
@Teri... vy good point about the "temporary loan" going to the tipped employees. I never thought of that befoe.
@Rachel... good to hear the perspedtive from one who is familiar with this practice.
@Louis... appreciate your noting that the change took some taking used to by the staff but ultimately it sorteditself out.
Comment by Louis Carmine on February 4, 2010 at 6:32pm
My company just began doing this just months ago. The staff took a while to get used to it and for them to join the rest of the populus with a regular paycheck. The experience has taught all to pay closer attention moneies coming and going out. Overall I approve of this procedure to pay out credit card tips. Also allows for less cash on hand in the hotel.
Comment by Rachel on February 4, 2010 at 7:39am
I worked as a server for private country clubs for years, and our tips were generally "written on" to the member's check which is charged to their member account. All tips were then added to my paycheck. While it was unfortunate to not have the cash in my pocket that night, I always appreciated a nice hefty paycheck!




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