Donna Genie breaks down Department of Labor rules on tips for studio owners. Owners can't accept tips meant for employees, with one exception: if you work directly for clients yourself, you can keep tips only for that service. The DOL enforces this strictly, so most owners should skip tips entirely.
Hey, just wanted to pop out for a second because I'm getting a question a good bit lately, and I think everybody needs to know the answer to this. I'm getting a question from studio owners about tips for the owner of the business. Many companies don't really follow this policy, but it's a Department of labor policy, and it's had some big rulings lately in restaurants specifically, so it could cause you some problems. Owners of businesses are not allowed to accept tips. Now, the rules are that tips were supposed to supplement wages, so that's why the owners are not allowed to have it. Now it does say the only exception is if the owner is also an employee providing direct services to customers. So that sounds good, right? However, they can only accept tips for the service they directly provide. And if you don't have any employees, then you can't collect tips. So it's a little wishy washy. But there's a lot of problems through the Department of Labor that could cause here. And there's one agency worse to have on your back than the irs, and that's the Department of Labor. So all it takes is one loose lift employee or an employee who's mad that they saw you get a bigger tip than they did to tip somebody off, no pun intended, and you've got problems. So we don't want that. So let's take it easy on this. We've had a lot of discussions about tip fatigue in the past as well, but owners should not accept tips, okay? That's just a simple, easy way to protect yourself and your business.
