Say (in the US) a person works as a cashier at a fairly busy, locally owned takeaway food place, where there is a tip jar on the counter.
If at the end of his/her shift there is determined to be a shortage in the cash register (on the order of, say, $15), is it legal for his/her manager to make up the difference out of the tip jar?
Probably not.
OTOH, that tip jar is taxable income and every dollar must be declared.
So be careful how you approach the matter.
State laws are specific on when an employer can deduct from a paycheck for cash shortages, if any, and taking from a tip jar is no different.
I would say NO, it is not legal.
In the US, it certainly violates the terms of the Fair Labor Standards Act. Here’s the Dept of Labor’s fact sheet on tips.
The employer may or may not be able to deduct money from a paycheck, but tips are not money the employer provides to employees. It’s money customers give directly to employees. They can’t legally confiscate it.
They may not have the legal authority to confiscate it, but they can coerce it, if the alternative is for the employee to be fired for mishandling cash.
I worked in retail management for a long time. From a loss prevention standpoint, any shortage/overage in the register should be accounted for, NOT covered up by “making up the difference” in any way (tip jar or pocket). An occasional mistake is perfectly normal and expected, but if there are continual mistakes by the same person or on a particular shift, management wants to address that issue (through re-training, or perhaps removing that person from a cash-handling position to another task). Hiding it doesn’t help solve the problem; it will just keep coming up. It is a fact of the business that human cashiers are going to make mistakes, and it is the responsibility of the employer to minimize the chance of it happening. An occasional mistake is one of the costs of doing business!
That being said, I have no idea if it is illegal, but as a manager I would consider it inappropriate to “punish” employees by forcing them to make up the difference from their tip jars, especially if the reason for the shortage(s) was improper training or perhaps the place is understaffed, forcing the employees to rush through transactions and make errors. I can’t imagine that, if the register is over, the manager would take out the extra money and put it into the tip jar! But an overage is just as bad as a shortage.
It’s an interesting question. My very first on the books job was as a dishwasher in a restaurant. If I broke a substantial amount of glassware, like the time I knocked over a stack of soda glass racks, I had to pay for them. When I had my own restaurant I never had any huge discrepancy at the register, but $5 to $10 on a shift wasn’t unusual, and on a busy night it may have been as much as $50. But I would attribute those to mistakes. If I had a suspicion someone was pocketing money I’d just fire them. I suppose if I could have paid people more money I would want an accurate register as one of the terms of employment and require losses to be made up. But even then there’d have to be some reasonable margin of error, and it would have to be legal.
Overall, just taking it out of tips isn’t right. If it’s legal, and you are going to do it at all, there should be a formal process for it.
Also, forgot to mention, occasionally the register was over. Not by much, but I didn’t give the money back. I don’t feel bad about it, on a bad tip night, and they were never great at the counter anyway, I’d throw money out of my own pocket into the jar. Once we ran a promotion where we donated tips to the pediatric wing of the local hospital. Whatever we donated I’d make up for from my own pocket so they staff didn’t end up losing the few dollars extra they would have made.
My experience has taught me that TIP jars consist of money usually retained by management. It the tips in the jar were disburesed by management they could constitute a legal tip pool; if management was to take a portion of the money to make up for a shortage the tip pool would be declared illegal and all employees would need to be paid the full minimum wage.
My co-workers love this type of situation.
One of my earliest jobs was working in a pub. There were no automatic tills - just the old fashioned type.
As a cellarman, one of my jobs was to keep an eye on the staff, most of whom were part time. It was generally considered far worse to be over on the till than short. The reasoning is this: The most common fraud is to short-change the customers, or to under-ring the cost of the drinks. The bar staff would not pocket the money straightaway for fear of being spotted, so they would bide their time. This meant that towards the end of the shift there would be too much money in the till which they would have to extract without being seen. sometimes that was not possible so the till would be over.
Funny. Just today at Starbucks, the lady gave me change from the tip jar. She couldn’t open the register – she was fumbling with the key to the drawer the whole time. I got my dollars change, and went an dumped the coins back into to tip jar as I intended to do anyway. But … weird. Wasn’t she eventually going to have to open the drawer for someone? Does everyone pay for their $3.58 latte with a credit card?
Or maybe fumbling with the keys was a pretense to cover up the fact that she planned to pocket your $5 and not ring the sale up at all. This kind of theft by employees is extremely common.
Very easy to open a register if you have the keys.
There’s a green key, a yellow key, a red key, and a metal key.
Metal key opens the drawer.
But the drawer shouldn’t have been locked if the store was open.
So I think Dracoi is right, you saw a theft in progress.
At my job in high school (arts and crafts chain), the drawer would open once if it was a cash transaction so we could give the person change. If we gave them the wrong change and then shut it, we could not open it again and would have to holler at a supervisor to get the key. It’s possible that they have a similar POS there and she didn’t want to bother going to get the keys, so she just took it out of the tip jar and planned to fix the discrepancy next time she happened to have the drawer open.
Our register at work has a key and very occasionally it won’t open even with the key if there are too many rolls of quarters in the drawer. Maybe her drawer was jammed somehow and she didn’t know to lift it up and shake it.
In New York state requiring employees to make up any sort of shortage is illegal. It’s documented instead.
I would think that the reverse must also occur for it to be legal.
If the register is OVER, the employer must give that money to the employees.
It can’t only benefit one party and be legal. If they take it from you for shortages, they must give it back to you for overages.
I know in New Jersey the only way an employer can legally take a penny from you is with a court order.
This is clearly wrong. It gives the employee an enormous incentive to short-change customers (since that is about the only way the drawer can be over).
No, the only proper way to handle overages and shortages is to document them and if a pattern occurs with a particular employee, have a discussion with that employee. Both shortages and overages represent a mishandling of the money which is a failure of the employee to properly perform the job.
We need to look first at what is best business practice … This comment is spot-on and these overages and shortages are usually documented separately from gross revenues … it’s important information that the business can use to make their operations more efficient … either spotting the poor discipline of some employees or some pervasive issue with the business’ procedures …
The only time I’ve been involved with these numbers they always balanced out over, say a month … we’re talking pennies difference … our employees were ripping us off in other ways …
Even if they’re just mistakes, you still want to document them so you can try to figure out what kind of mistake is occurring. For instance, a discrepancy of exactly $5 or $10 probably means that the cashier misread the denomination of the bill the customer handed over, while a discrepancy that’s a multiple of $0.09 probably indicates a transposition of digits, and a discrepancy of $0.01, $0.05, $0.10, or $0.25 is probably a dropped coin.
I had a friend who worked in a coffee shop, and once someone stole some money. It happened because the owner kept deposit pouches under the cash register unguarded, and employees were often alone in the store, and had to go in the back, leaving anything in the front up for grabs.
So, of course, the deposit pouch with a couple hundred dollars vanished one day. It could have happened during one of two people’s shifts, so the owner decided to deduct $20/week from their paychecks until the theft was made up. He just did it by fiat, and I’m sure it was illegal, but her response was to quit. It was a part-time job while she was in college, and she didn’t absolutely need it.
I told her she should have reported him to someone, but at the time we were 22, and couldn’t think exactly who she could report him to.
I just hope he didn’t go and try to take even more money from the other employee.