"Wage theft" is the legal term for any unlawful withholding of wages owed to a worker. In tipped industries it shows up in specific, recognizable patterns. Knowing the patterns is the first step to making them stop.
The seven most common violations
1. Managers taking a share of tips
Under FLSA Section 203(m)(2)(B), managers and supervisors cannot keep any portion of an employee's tips, even in a valid tip pool. "Manager" is defined by duties (authority to hire, fire, direct work, or discipline), not by title. A "shift lead" who has supervisory authority is a manager for these purposes.
This is the most common violation. A manager joining the tip pool, taking a cut of credit card tips for "processing," or claiming a percentage as "training" — all illegal.
2. Sub-minimum wage without makeup pay
If an employer uses the tip credit to pay below regular minimum wage, total compensation (direct wage + tips) must still reach the full minimum wage for the pay period. If tips are short, the employer must make up the difference. Many don't track this, and the result is workers earning less than minimum wage.
Example: federal direct wage $2.13/hr × 8 hrs = $17.04, plus $40 in tips = $57.04 for the shift. Federal minimum for 8 hrs = $58. The employer owes $0.96 in makeup pay.
3. Off-the-clock work
Sidework before the shift starts. Rolling silverware after clocking out. Mandatory pre-shift meetings unpaid. All time spent on employer-directed tasks is compensable work time under FLSA. If you're working, you're on the clock.
4. Tip pool includes BOH at the tipped wage
BOH staff (cooks, dishwashers) can legally be in a tip pool — but only if the employer pays the full minimum wage (no tip credit) to all participants. An employer using the tip credit AND including BOH in the pool is in violation.
5. Illegal deductions for walkouts, breakage, cash drawer shortages
Federal law allows these deductions only if they don't bring you below minimum wage for the pay period. Many states prohibit them outright (California, Massachusetts, others). "Tipped employees pay for their own walkouts" is not legally enforceable in most jurisdictions.
6. Excessive non-tip-producing sidework at the tipped wage
The 80/20 rule historically required full minimum wage for sidework time exceeding 20% of total hours, or any single task lasting 30+ continuous minutes. The 2024 5th Circuit ruling struck down the federal rule, but several states (CA, IL, MA, MN, NY, WA) maintain their own. See our sidework guide for details.
7. Credit card fee deductions on tips
Federally, an employer can deduct the proportional credit card processing fee from a credit card tip (e.g., a 3% fee on a $20 tip means the employer keeps $0.60). The deduction cannot bring you below minimum wage, and cannot be more than the actual fee. Some states (California, others) prohibit it entirely.
How to document violations
Documentation is the foundation of any wage claim. Start now, even if you're not sure you'll act:
- Save every paystub. If you receive electronic stubs, screenshot them.
- Keep your own time log. Clock-in and clock-out times in your own records, separate from the employer's system.
- Track sidework time in detail — what task, how long, when in the shift.
- Save tip-out slips and tip pool distribution sheets. Photograph them daily.
- Document who's in the tip pool. If a manager is in the pool, write down dates and names.
- Save text messages, schedules, employee handbooks — anything establishing your role and the working conditions.
- If you take notes, mark each entry with the date, and don't alter prior entries.
Where to file
Federal: DOL Wage and Hour Division
File at dol.gov/whd or by calling 1-866-487-9243. Complaints are confidential — your employer is not told who reported. WHD investigates, determines violations, and recovers back wages.
State: Labor commissioner or labor department
Every state has its own. California's DLSE is particularly active. New York's DOL has online wage claim filing. Search "[your state] labor commissioner wage claim."
Private lawsuit
You can sue your employer in federal or state court for FLSA violations. Many wage-and-hour attorneys take cases on contingency (they only get paid if you win). Look for attorneys who specialize in wage-and-hour or restaurant cases.
What you can recover
- Unpaid wages: back pay for 2 years (3 if willful) federally; longer in some states
- Liquidated damages: under FLSA, often equal to the back wages — effectively doubling your recovery
- Interest: on the unpaid amounts
- Attorney fees: in many FLSA cases, the employer pays the worker's attorney fees
For a tipped worker shorted $50/week for two years, a successful claim could recover $5,200 + $5,200 in liquidated damages + interest + fees — a real number.
Protection from retaliation
It is illegal under FLSA Section 215(a)(3) for an employer to fire, demote, or otherwise retaliate against a worker for filing a wage complaint. Retaliation triggers a separate DOL investigation with additional penalties. If you've filed and your hours get cut or you're suddenly terminated — that's a second case.