Restaurants Use Tips to Cut Labor Costs

Nok Lek Travel Lifestyle/ShutterstockYou received great service and want to reward your waiter. But your server may not be receiving the entire tip you left. Some restaurants and food establishments are quietly subsidizing their labor costs instead of letting workers keep their tips.But is this legal? Restaurateurs have been legally taking tips to supplement payroll. It’s allowed by the federal government, but some states have changed that. Food-delivery services also have been accused of this practice.Tipped Employees Under the Fair Labor Standards ActThe Fair Labor Standards Act (FLSA), according to the Department of Labor, allows employers to take a tip credit toward their minimum wage and overtime obligations for tipped employees.