Tips, Wages, and Your Rights: An Interview with Tip-Pool Lawyer Bob Debes

Cash - Photo by Eric Karjala

When I first decided to write the “Served” column, I wanted to do a couple of things: I wanted to bring negative attention to places I had worked that treated their employees like shit. Another thing I hoped would happen was that some service industry people who were sick of being treated like shit would get together and help each other do something about it. I think in the year and a half that I wrote this column I maybeaccomplished my first goal. Probably not to the extent that I had hoped, but maybe restaurants like El Meson have slightly less business because of me … maybe. It became clear pretty early on that the second goal was not going to happen.

Again and again I ran into the same problems at different jobs. And when I wrote about it, it seemed that most of my fellow servers mistook my frustration with the laws and customs here as disdain for the industry in general. I don’t mean to complain and whine. When I say we are making jack-shit in wages, it’s not because I think I’m better than the job at hand, I just think that we deserve better. It seems like a lot of servers in Texas are barely scraping by, while even more restaurant owners are getting filthy rich. I know that by dropping out of school I’ve resigned myself to this type of work. I don’t mind this kind of work. Usually, I even like it. I just want waiting tables in Austin to be the best that it can be and I know it can be a hell of a lot better.

So, my advice: if you love this place and you love this industry – why not improve it? Know the few laws put in place to protect you, know your rights, and don’t let your employers take advantage of you. To educate everyone and clear up some “grey” area, I talked with Bob Debes, a lawyer in Houston, who deals primarily with tip and wage disputes. Hopefully this helps.


Marie (M): Give me a run-down on tip-pool law, your experience with it, and what you do on a day-to-day basis.

Bob Debes (BD): Sure. I’ve been practicing law for 24 years. Probably 90% of my practice involves handling wage and hour disputes, primarily in the restaurant and bar industries. The same law that effects people in the restaurants and bars also affects people in hotels, valets, exotic dancers and cocktail waitresses at strip clubs. It’s more expansive than you might think and it covers everyone, generally speaking, in the service industry.

So, what the law says in general is that if you’re an employer and you have annual revenues of at least 500,000 dollars a year – that’s in total sales, not profit – then you’re required to pay your employees at least $7.25 an hour for each and every hour that they’ve worked plus overtime at the rate of one and a half times the regular rate of pay for all hours worked excess of forty in a work-week. That’s the general law. Now, that’s just the minimum wage law. The way that the tip-pool stuff becomes relevant is that Congress says that even though employers are required to pay at least $7.25 an hour, that there’s an exception that exists for one category of person: tipped employees in the service industry.

What it says is that if you’re a tipped employee, that your employer can pay you as little as $2.13 an hour and take a tip-credit against their minimum wage obligations. An example is, let’s say you’re a waiter, nine times out of ten you’re going to get paid $2.13 an hour plus you’re going to get to keep part of the tips that you make. As long as you make enough in tips to cover the difference between the federal mandated $7.25 an hour and the $2.13 an hour that your employer pays you in direct wages, then it’s no problem. For instance, let’s say your total compensation for a week is $100, but you’ve worked 30 hours so you’ve only made a little over $3 an hour. The law says that the employer has the duty to make up the difference between the $3 an hour that you’ve made and the $7.25 an hour that you’re required to make.

A lot of times employers don’t even pay the $2.13 and people just work for tips. That’s a violation. Even if you made a million dollars in tips that year, if they didn’t pay you $2.13 an hour, then they owe you $7.25 an hour for each and every hour that you’ve worked for up to the past three years.

M: That’s on a week-by-week basis as opposed to a pay period?

BD: That’s on a weekly basis. Not a bi-weekly or monthly. But that is, quite honestly, a very rare situation. Most waiters are always making more than $7.25 an hour when you add the tips. Where the problem exists, though, is that there’s another provision of the Minimum Wage Act that says if the employer is going to take a tip-credit that it can only make the waiter share tips with other “tipped employees.” That’s where I come into play nine times out of ten. Someone will call me and say, “Hey, I’m a waiter at Chuy’s, I make $2.13 an hour and we’re required by our employer to share tips at the end of the night. We give, of our total sales, 3% to a tip-pool and the employer pays the hostess, the bartender, the busboy, the food runner with that money.” Again, the laws says that it’s perfectly legal for the employer to make them share their tips with other tipped employees, but what happens a lot of times is that the employer takes that money and they distribute it to not only the busboy or bartender, but they also will share the money with the kitchen staff, like the cooks, the dishwashers, the valet attendant, the door guy, the security guy, members of management. Or in a lot of instances owners will take the money and keep it for themselves because maybe they come in and bartend once a week or they’re the head cook. Well, that’s illegal because you can only share tips with other tipped employees and by definition a kitchen cook is not going to be tip eligible.

M: Is that only when the employer is using a tip-credit? What if you’re making a full minimum wage?

BD: Wow. You just raised an issue that became the subject of a huge fight in the Ninth Circuit (which is where California is), where they didn’t take a tip-credit. The employer paid $8 but they were making the employees share their tips with the busser, the bartender, blah, blah, blah, and members of the kitchen staff. The person who sued said, “well look, the kitchen staff aren’t regularly tipped employees, we shouldn’t be required to tip them out.” And the Ninth Circuit said, “Sorry, that law only applies when the employer has taken a tip-credit.” That issue, about 2 years ago, has not gone up to the Supreme Court and will not until there’s another case that comes along that comes from another Circuit Court and there’s a split of authority between the two districts. Then the Supreme Court might take up the issue.

In the interim, the Department of Labor, after that case came out, said the Ninth Circuit got it wrong. That the tips are the employee’s, even if you don’t take a tip-credit, you can’t make them share their tips with people who aren’t tip eligible. It’s a very heated argument right now. It’s something that we’re working on as we speak, trying to get that reversed.

M: In a tip-pool situation what are positions that are always allowed to take tips?

BD: Well, it’s funny because Congress did not enumerate those positions that could automatically take tips. That would’ve made it a lot easier. They didn’t do that. They just said that a tipped employee is someone who makes at least $30 a month in tips. Those people would necessarily include people like the busboy, the bartender, hostess, and food-runner because they have interaction with the customer. Those are circumstances where a customer could say “Hey, busboy, thanks so much for bringing me those constant refills of tea, I really appreciate it, I want to give you an extra $3 and don’t give this to the waiter because this is really something you did.” Or a bartender who makes some really good drinks so even though you’re sitting at the table and not at the bar, it would be customary for a bartender to get a tip for his or her good service.

M: Are there any particular job titles that prohibit a certain person from getting tips?

BD: Well, 100% without a doubt there’s the owner of the company. He or she cannot share in the tips. No question about that. That’s actually spelled out in the law. What it says is that the employer or the employer’s agent, who is someone acting on or for the benefit of the employer, cannot share in the tips. So the employer clearly can’t, but also people like a general manager who shares the responsibility or has the authority to make policy at the restaurant or is in charge of the day-to-day operations of the restaurant, they can’t share in the tips. Those two people, without a dispute, can’t be in a tip-pool.

Where it gets a little bit grey, for example, is I have a big class-action against Luby’s. We had about 1,100 waiters in the case. The waiters bus the tables themselves and put the dishes in a return area where a person with a title called “service attendant,” takes the dishes and gives them a preliminary scrub down and puts them on a conveyer belt to the dishwasher. So, the title “service attendant,” Luby’s argued, was a busboy because they did duties that were consistent of that of a busboy. Our position was that they were really a kitchen employee because their duties really entailed working in the kitchen doing traditional dishwashing duties. It’s very difficult to look categorically at a job title and say unequivocally that they can or cannot participate in a tip-pool. We really have to look at the duties of the position and what it is exactly that they are doing. Another example is an expeditor or expo. Generally his or her duty is to stay just outside of the kitchen, but not in the restaurant where the patrons sit, and they stand there and they group the plates (coming out of the kitchen) by table order and wipe down plates and garnish them or whatever, but they are really just “traying” the food. The food-runner takes the food or the waiter does. So the expo is generally speaking not a tip eligible employee, but sometimes expos at some restaurants run the food to the table, which is a duty that a waiter would normally do and therefore they would be tip eligible.

M: So it really depends on the actual job…

BD: Exactly.

M: If there is a manager or owner that “suggests” that they get tipped out, but doesn’t “require” it, how does that fit under the law?

BD: That gets into whether or not the tip-sharing arrangement is voluntary or not. You can hypothetically have a situation where you have an employee that is making less than the full minimum wage ($2.13 an hour) and they make really good money one night and they say, to the owner, “you helped me out, I’m going to give you $50.” There’s nothing wrong with that. It doesn’t implicate the employer at all because it’s totally a voluntary tip out in recognition of the good service that was provided by somebody else. I’ll be honest with you: in almost 24 years of practice, that has happened less than a handful of times and the reason is because no one really wants to give away their money, especially if they’re getting paid $2.13 an hour. You are working for your tips. So it’s not really credible that there’s not some string attached to it.

Another example is, I’m involved in a case right now against a strip club and I had a big one in Austin about a year ago, that was against two strip clubs in Austin: these strip clubs suggest in all of the policies, procedures, and things, that tipping out the managers is totally discretionary and voluntary on the part of the stripper – you’re not required to. However it is suggested that if you do tip them out, you do between $10 and $25 a night. Well, every person that I talked to says that “No, it’s not voluntary, you do it.” Because, if you don’t, then the manager won’t help you with disputes with a customer on a tab or something. A lot of them won’t sign the strippers out when they leave until they get tipped and the strippers have to get a signature in order to leave the club. We see a lot of this in restaurants where it’s suggested, not mandatory but suggested, that you do these things. The employee always says that if you don’t then the manager will send you home early or assign you to a section that only has four tops instead of eight tops. So, it’s very rare when we see a true “voluntary” tip-share.

M: Since I’ve lived in Austin I’ve had several violations as a tipped employee, what is the best way to deal with these things?

BD: Short of contacting a lawyer or something?

M: I know that at the job I just quit because the general manager basically “suggested” that we tip him and then the shift leads felt obligated to tip him because they wanted him to help them. So, I didn’t want to be passive aggressive about it and he was new, so I confronted him and talked to him personally. That definitely wasn’t the best way to go about it. I’m just wondering for things like that.

BD: You know, it’s hard because it’s not one of those things that is one-size-fits-all. It’s all going to be dependent on the personalities involved. I like to give everybody the benefit of the doubt that the reason that these illegal tip-pools exist, in the first place, is because the person who owns or runs the restaurant, that’s what they did when they were a waiter or waitress or growing up in the service industry. So when they decided to purchase or manage a restaurant of their own they just took those policies and implemented them.

I like to think that people are just making an honest mistake because it is a very technical law. You can make your employees share tips with certain people and not others. For the people who don’t take the time to look, they can step into a snake pit.

About a month ago I notified an employer on a Thursday and that Friday they messengered a check to my client to pay for everything because they said, “we’ve made an honest mistake.” I think it was an honest mistake, or they just wanted to pay him off before it became public or before he got other people to do the same thing. Regardless, it was paid very quickly. But there are some owners who will admit to me that “yes, I’m the owner, yes I was the chef, and yes, I made everybody tip me out.” And I’ll tell them what’s wrong with it and they’ll think “Congress is crazy if they think something is wrong with it” and they’ll make me go down and try a lawsuit. And it’s crazy. It just depends on the personalities of the boss.

Most of the time I would say that before you talk to the general manager about it, collect your evidence. Get what you need to prove that the violation exists. Because once you approach the GM or owner about it, it’s funny how when we ask for that same evidence once the lawsuit’s been filed, it no longer exists. I think that it’s not a bad idea to talk to them about it, but I would always recommend that you get the evidence first. You may be gone and they may destroy the evidence.

M: Specifically what kinds of things would you need as evidence?

BD: It’s their burden to prove that they paid you at least $2.13 an hour and that they complied with the wage laws by making you share tips with only tip-eligible people. So, if you know that they are making you share tips with the busboy or dishwasher because there is a tip distribution report that’s created by the manager or there’s an envelope that he or she puts the money into for the dishwasher and it has “dishwasher” on it. Take a picture of the envelope, take a picture of the spreadsheet. If the tips are distributed to the dishwasher on his or her check, see if you can get a copy of the check and take a picture of it. If they’re so innocent to put it in writing that you have to share tips with the kitchen staff, then get a picture of that policy (i.e.: “tips for cooks” on a tip jar). Anything that you can get your hands on that shows where the tips are going.

M: Besides tip violations, what other violations are common in the service industry?

BD: There’s the area of deductions. It’s very common in restaurants and bars that the employer says, “OK, we have a mandatory uniform here you have to wear black pants, black non-slip shoes, and a logoed shirt.” And that’s perfectly fine, there’s nothing wrong with them making you have a uniform, but they can’t make you buy the uniform from them. If they’re going to make you wear a logoed shirt and make you pay for it that’s a violation of the law. If the shirt doesn’t have to have a monogram or a logo and you can go to Target or Marshalls or wherever to buy it, there’s no violation. They can make you buy your uniform, from a third party that they have a relationship with. These are pieces of clothing that you could, if you chose, wear out – outside of the office so to speak. But a Chuy’s or TGIFriday’s shirt logoed polo shirt, you can’t.

M: Well, I’ve had that problem several places as well, but it’s good to know.

BD: It’s really common – it happens from big chain restaurants down to the mom n’ pops. It’s just a very common problem. But, I think it’s one of the few times in my life really that I get to pound my chest about something. I think there’s been enough public awareness about it that restaurants are really starting to comply.

Bob Debes can be reached at 713.623.0900 or


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