Running a Restaurant/Tip Reporting


I work in an high volume restaurant in California. My employer has instructed me to report tips for secondary tipped employees per a outside consultant that says this is legal. We do know how much they are tipped and they do enter their tips at the end of the shift into the POS system. However I do have a listing of what they actually made. If they report less than made I adjust the tips to what is reported to me on a check out sheet.  Having been through a tip audit by the IRS I was led to believe I couldn't change employees reported tips. Is this legal?

I'm not sure why a consultant would say such a thing. Except that he doesn't know the law.

Employees are required to report tips, not employers.

See and "Whether or not you are required to allocate tips, your employees must continue to report all tips to you, and you must use the amounts they report to figure payroll taxes."...from

Any changes made by you could be seen as tampering with a legally mandated reporting function and viewed as fraud on the part of the employer who engages in such behavior.

If you suspect an employee of under-reporting tips then you should address it within the formal disciplinary procedures you have.

Adding tips to an employee's report probably open you up to a civil action on the part of the employee under both California and federal law for fraud, tax evasion, and several other charges.

Rarely do I see an employer who wants to change the reports of their employees because he thinks they are under-reporting.  

Running a Restaurant

All Answers

Answers by Expert:

Ask Experts


Jeffrey Summers


I am the Founder & Owner of Summers Hospitality Group. We have over 300 years of successful experience in operating and consulting with chain, franchise and independent restaurant & hotel operators around the world. Check us out on the web for more information at http://SummersHospitality.Group or call us toll free at 888-998-8744.


We have experience on any topic related to the restaurant & hospitality industry - from Menu R&D, Menu Engineering, Marketing Strategies, New Store Openings, P&L Analysis, Lease Negotiations, Staffing, Policies & Procedures, Building & Design, Site Location, Branding, PR & Promotions, Multi-Unit Development, and any other area effecting the operation of your business.

The National Restaurant Association. The Society of Hospitality Management. The Gerson Lehrman Leisure & Lodging Council The Professional Business Coaches Alliance The International Council on Hotel, Restaurant and Institutional Education Several state restaurant & hotel associations.

My articles and opinion pieces have been featured on several industry websites, magazines, blogs and forums including: Money Magazine Wall Street Journal USA Today Restaurant Startup & Growth Magazine American Express' Briefing Newsletter Nation's Restaurant News and tons more!

I hold degrees in Economics, English, Culinary Arts and industry certifications in Hospitality Management and Restaurant & Catering Management.

Past/Present Clients
Here's a list of some of the brands we have worked with: Hardee's, Marriott, Hilton, Connie's Pizza, Burger King, Chili's, Long John Silver's, Bar Louie's, The Purple Sage Bistro, Applebee's, Shoney's, T.G.I. Friday's, La Dolce Vita Pastries & Catering, 5 Seasons Sports Clubs..and many more.

©2017 All rights reserved.

[an error occurred while processing this directive]