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.  

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Jeffrey Summers


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