Who Controls Gratuities?

Posted Oct 01, 2011

This is a fairly old subject, however, I was thinking of it the other day and decided to discuss it. The situation is this: Wynn Resorts instituted a controversial tip pool program. All the tips from each shift are pooled and a percentage of it are given to the supervisors.

The tip pool was declared legal according to the Nevada State Labor Commissioner. (Local news article giving details here.) However, what's legal and what's right aren't always the same, so that brings up the question: Who do the tips really belong too?

In the model Wynn is working under, they are essentially saying that the business claim ownership over those funds and can therefore do as they please with them. I believe this is incorrect. That begs the question if it's business funds that they can control the distribution over, why don't companies report them and pay taxes on them? Oh right, because it's not business income, it's employee income.

I can also illustrate the problem just like this:

Explaining Tip Income

This is as clear as I can possibly make it.

Normal income comes from the customer, is given to the business, who then gives a portion of it to the employees in the form of wages (and benefits, but let's not confuse the issue)

Tips/Gratuities, however, are given by the customer directly to the employee. They are highly variable, and often based on the direct actions of that specific employee. A specific customer is giving a specific amount to a specific person because of what they did and how good they did it. It's meant to be a bonus. The customer does not mean for the tip to go to someone else, either in part or whole.

I believe this is quite simply a power grab, trying to exert control over monies that the business has no control over.

This is a highly dangerous precedent and one that should be reversed as soon as possible. The next step is confiscating all tips and distributing them "evenly" among all employees, then deciding to use some to pay for bonuses/medical benefits, etc., then paying for other stuff like board member or CEO bonuses. It's not long before tips are taken from the employees they're meant to go toward and used for other things. And as I said, what company wouldn't love to have funds they don't report or pay taxes on?

To make it even more clear: Leave my tips alone. They don't belong to you, they're mine.

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