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2 Issues: Boss takes out too much for taxes and doesn't report some

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sharrymeow

Junior Member
What is the name of your state (only U.S. law)? Florida

I started working at a sushi restaurant and 12% (around 12%, she doesn't calculate exactly, she rounds..) of my cash tips get taken out to pay for "credit card fees and taxes."

Normally, that money is taken out to tip out the sushi chefs/kitchen. But it's not. It goes towards credit card fees that the owner should be paying for, and the "taxes" paid aren't being reported. So it's like she's using money I earned to pay for HER taxes.

For my hourly wage ($5.03/hour in Florida), she takes out over 50% for taxes. She claims she takes out 7.65% for my total hourly + tips made. See my issue with this? If she's already taking out 12% from my cash, why is she taking out more a second time?? And when I calculated everything with her, I explained my paycheck was still significantly less than it should have been, which leads me to my third point.

She doesn't record EXACTLY what I make in tips. She ESTIMATES. She estimated I make 14/hour in tips. SO, my first paycheck, out of serving 9.5 hours, she estimated I made $130 in tips. In actuality, I only made $76.

When I pointed that out, she told me she uses an average(I've been working here 3 weeks now and have only seen that $14/hr once. The real average is $10), none of the other servers have complained about it, that's how she does it, and if I don't like it, I can leave. She also mentioned that most places take advantage of using tip credits, which she doesn't...

What can I do about this? This isn't right. My boss said she can get me a copy of my paystub from her accountant if needed. She also provides W-2s. I'm worried because I spoke with two of the other servers. Both are college students like me and barely understand how taxes work. They both started working at the same time, so they both dealt with the exact same things, but one of them got a tax refund while the other had to pay out of her pocket because she was informed that her boss didn't pay a certain part of her taxes. Now, I haven't asked the second for more detail, but I would assume that she got taxes taken out of her paycheck because if her co-worker did, why wouldn't she? So that's another issue. Why would she need to pay more if so much was already taken out of her paycheck?
 


LdiJ

Senior Member
What is the name of your state (only U.S. law)? Florida

I started working at a sushi restaurant and 12% (around 12%, she doesn't calculate exactly, she rounds..) of my cash tips get taken out to pay for "credit card fees and taxes."

Normally, that money is taken out to tip out the sushi chefs/kitchen. But it's not. It goes towards credit card fees that the owner should be paying for, and the "taxes" paid aren't being reported. So it's like she's using money I earned to pay for HER taxes.
Yes, she is taking some of your money to cover her expenses...some restaurant owners do that. I personally think its tacky but its not illegal.

For my hourly wage ($5.03/hour in Florida), she takes out over 50% for taxes. She claims she takes out 7.65% for my total hourly + tips made. See my issue with this? If she's already taking out 12% from my cash, why is she taking out more a second time?? And when I calculated everything with her, I explained my paycheck was still significantly less than it should have been, which leads me to my third point.
The 7.65% for your total hourly plus tips is an absolute legal REQUIREMENT for your employer. She has absolutely no choice about that. That is for social security and medicare taxes. Every employer that you will ever work for, for the rest of your life, will have to do the same.

She doesn't record EXACTLY what I make in tips. She ESTIMATES. She estimated I make 14/hour in tips. SO, my first paycheck, out of serving 9.5 hours, she estimated I made $130 in tips. In actuality, I only made $76.
It is common for restaurant employers to use a percentage of sales to estimate your tip income. In fact, its pretty much the standard in the industry.

When I pointed that out, she told me she uses an average(I've been working here 3 weeks now and have only seen that $14/hr once. The real average is $10), none of the other servers have complained about it, that's how she does it, and if I don't like it, I can leave. She also mentioned that most places take advantage of using tip credits, which she doesn't...

What can I do about this? This isn't right. My boss said she can get me a copy of my paystub from her accountant if needed. She also provides W-2s. I'm worried because I spoke with two of the other servers. Both are college students like me and barely understand how taxes work. They both started working at the same time, so they both dealt with the exact same things, but one of them got a tax refund while the other had to pay out of her pocket because she was informed that her boss didn't pay a certain part of her taxes. Now, I haven't asked the second for more detail, but I would assume that she got taxes taken out of her paycheck because if her co-worker did, why wouldn't she? So that's another issue. Why would she need to pay more if so much was already taken out of her paycheck?
How much federal and state income tax gets withheld from an individual employees paycheck depends entirely on the wages earned, and the exemptions claimed on their W4. No two employees will have the same figures. If one employee got a refund and the other had to pay, (and they were both single with no children) then I would guess that the first employee claimed zero exemptions on their W4 and the other employee claimed 1 or 2.

However, at the same time many other factors play into whether or not someone gets a refund therefore you can never compare one person's taxes to another's.
 

sharrymeow

Junior Member
Yes, she is taking some of your money to cover her expenses...some restaurant owners do that. I personally think its tacky but its not illegal.



The 7.65% for your total hourly plus tips is an absolute legal REQUIREMENT for your employer. She has absolutely no choice about that. That is for social security and medicare taxes. Every employer that you will ever work for, for the rest of your life, will have to do the same.



It is common for restaurant employers to use a percentage of sales to estimate your tip income. In fact, its pretty much the standard in the industry.



How much federal and state income tax gets withheld from an individual employees paycheck depends entirely on the wages earned, and the exemptions claimed on their W4. No two employees will have the same figures. If one employee got a refund and the other had to pay, (and they were both single with no children) then I would guess that the first employee claimed zero exemptions on their W4 and the other employee claimed 1 or 2.

However, at the same time many other factors play into whether or not someone gets a refund therefore you can never compare one person's taxes to another's.
Thank you for the response. Wow, I had no idea employers can take out from my paycheck to cover their expenses and estimate my tip income. I guess I can't really fight that.

Also, I have yet to fill out a W-4 for her. She has a copy of my SS card and Driver's License, though.
 

LdiJ

Senior Member
Thank you for the response. Wow, I had no idea employers can take out from my paycheck to cover their expenses and estimate my tip income. I guess I can't really fight that.

Also, I have yet to fill out a W-4 for her. She has a copy of my SS card and Driver's License, though.
Well, that is pretty sloppy on her part because she is therefore deciding how many exemptions to use for you herself, and that is not wise. Of course, if you are not working very many hours per week then you might not end up having any regular federal income taxes withheld anyway. Florida doesn't have state income tax so that would not be a factor for you.
 

sharrymeow

Junior Member
Well, that is pretty sloppy on her part because she is therefore deciding how many exemptions to use for you herself, and that is not wise. Of course, if you are not working very many hours per week then you might not end up having any regular federal income taxes withheld anyway. Florida doesn't have state income tax so that would not be a factor for you.
I've never been exempt from paying FIT. I currently work around 20-25 hours a week, and with her tip income estimate, my gross weekly income comes to $380.6-$475.75. (The reason the first paycheck was for 9.5 hours is because the first 18 hours were for training, during which I was paid the minimum $8.05/hour.)

I typically claim Single/0, and get a bigger tax return for that. The co-worker who got a refund said she also files Single/0, she gets a bigger paycheck and a smaller tax refund. That frightens me considering this is actually the most I've ever had taken out of my paycheck waiting tables, so I'm going to be disappointed if I get a smaller refund.

Although, I'm relieved to know that despite how fishy all of this sounds, my boss can legally do it. I was afraid I'd be in a situation in which my boss was breaking the law.
 

Zigner

Senior Member, Non-Attorney
Although, I'm relieved to know that despite how fishy all of this sounds, my boss can legally do it. I was afraid I'd be in a situation in which my boss was breaking the law.
Nobody said your boss wasn't breaking the law. You've simply been advised that your boss isn't necessarily breaking the law.
 

sharrymeow

Junior Member
Nobody said your boss wasn't breaking the law. You've simply been advised that your boss isn't necessarily breaking the law.
Well...... Unless someone can inform me of what I can do about that, looks like I've just got to deal with the shadiness and hope for the best until I can find a better job. Currently, it really seems like I can't do anything about it.
 

Ladyback1

Senior Member
Well...... Unless someone can inform me of what I can do about that, looks like I've just got to deal with the shadiness and hope for the best until I can find a better job. Currently, it really seems like I can't do anything about it.
contact your state's Dept. of Labor, Hour and wage division (probably) and run the scenario by them. They may be able to provide very good information and help.
 

LdiJ

Senior Member
contact your state's Dept. of Labor, Hour and wage division (probably) and run the scenario by them. They may be able to provide very good information and help.
The only issue that is shady at all is that 12% that is being withheld from the tips and that is not illegal. Its tacky and shady if she is using it to cover her own expenses, but not illegal. As long as the OP's paychecks reflect at least minimum wage between tips and hourly wages, its nigh on impossible to make any DOL claim.

Most higher end restaurants take at least 15% of server's tips to tip out bus persons and other staff that assist the wait staff...so the employer has plenty of opportunity to explain away the 12% should the DOL decide its even worth looking at.
 

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