Posts Tagged ‘tip reporting’
Know the Law for Tipped Employees
The U.S. Court of Appeals for the Eighth Circuit recently upheld a lower court’s ruling denying summary judgment to a restaurant that claimed a tip credit against all of the wages earned by its servers and bartenders, even though the employees spent considerable time performing tasks for which they did not receive tips [Fast v. Applebee's International, Inc., CA8, Dkt. No. 10-1725/10-1726, 4/21/11].
Servers and bartenders at Applebee’s restaurants filed a lawsuit claiming that they regularly spent more than 20% of their time on general preparation and maintenance, activities that didn’t generate tips. Applebee’s took a tip credit for all work performed by its servers and bartenders, including the general preparation and maintenance work, even when it amounted to more than 20% of the employee’s work. The servers contended that this was a violation of the Fair Labor Standards Act (FLSA) and that Applebee’s owed them additional compensation.
What You Need to Know About Tip Reporting
The IRS is working hard to find lost revenue. Non-reported or under reported income by restaurant workers is under scrutiny. Restaurants owners have the critical tasks of keeping records on tips received and compelling employees to report tips.
All employees receiving $20.00 or more a month in tips must report 100% of their tips to their employer and are required to pay taxes on all their wages including tips.
