Two years ago, the Texanist fielded a question about tipping at barbecue joints. Reader Justin Schwartz was making his way through the Top 50 barbecue list and sought ethical clarity on the acceptable percentage to leave the staff. Unlike restaurants with servers, where a 20 percent tip is customary, most barbecue joints hand orders to customers over a counter rather than deliver them to a table. Still, the Texanist asked readers to consider the time and effort that goes into smoking meat, along with the uncomfortable pit-room environment. “We should think of a generous gratuity for our barbecue workers as a chance to show our appreciation for that with which we have been blessed,” he wrote. I agree, but where do those tips go—and where should they go?
The Wage and Hour Division of the United States Department of Labor (DOL) has been asking that question of several Texas barbecue joints over the last couple of years. In April 2022, the DOL announced it had recovered $867,572 in back wages and misallocated tips from Hard Eight BBQ in Roanoke. Five months later, Black’s Barbecue, based in Lockhart, was in the headlines for improperly sharing employee tips with managers to the tune of $230,353. The owners of both restaurants blamed changes in the federal rules on tip sharing, and the DOL said both are now in compliance.
This year, the DOL investigated two other Texas barbecue joints for noncompliant tip sharing: Tejas Chocolate & Barbecue, in Tomball, and Valentina’s Tex Mex BBQ, in Buda. When Valentina’s closed in April, before it could repay all the back wages, the case went dormant, but Tejas is currently in litigation with the DOL. No matter the status of any individual case, there is clearly confusion about tipping requirements in several Texas barbecue joints.
I reached out to Kimberly Avery, the DOL’s director of enforcement for the Southwest region. I wanted to understand if there’s something about the barbecue service model that makes owners more prone to running afoul of tipping regulations and labor laws. Her short answer was no. The DOL has completed 1,200 investigations in Texas over the last two years. Both full-service and limited-service restaurant owners improperly share tips at about an equal rate. Avery pointed me to the DOL’s fact sheet on tipped employees as a resource to educate employers about their obligations and employees about their rights.
Issues often arise when tips are pooled for later distribution, which can happen when tips are received via online orders, cash tip jars, and on-screen displays at the counter. No matter how tips are received, they are meant to go to hourly employees who are not managers or owners. “Sometimes the managers, supervisors, or even owners are being included in that tip pool, or are otherwise keeping the tips,” Avery said, which can lead to a DOL investigation. Avoiding that should be easy enough for restaurant owners, but some may need to refresh their definitions of managers or supervisors to be more in line with the DOL.
I’ve seen some confusion from consumers about tipped employees as well. An employer can pay employees who receive tips, usually servers, as little as $2.13 per hour, as long as that wage and the tips they receive add up to more than the federal minimum wage of $7.25 per hour. Most barbecue joints don’t offer table service and therefore don’t have servers. It is far more common for a barbecue-joint employee to receive at least minimum wage before any tips they’re entitled to are factored in.
Restaurant owners can also receive tips, but only in specific situations. First, if the tip is given via a credit card, the owner can keep the portion of the tip equal to the fee percentage charged by the credit card company. Avery also explained that owners can keep tips “if the services being provided are being directly and solely provided by the owner.” This might seem obvious for a small barbecue joint run solely by the owner or by a couple business partners. When a customer adds a tip to their order, the owner(s) is the only one there to receive it. Confusion can arise when that small business begins to grow.
As a hypothetical situation, imagine a food truck run by a couple with shared ownership. They get more business than the two of them can handle, so they hire a new employee to receive customer orders and run the register. If everyone else besides that new employee is an owner, then the employee is legally entitled to all of the tips the business receives during the hours they are working. For a growing business, tip money that no longer belongs to the owner(s) might not be an expense a restaurant considers when bringing on some part-time help.
Some restaurant owners have added a fee to each bill that either exists in addition to a customer’s tip or replaces the tip completely. It doesn’t matter whether the restaurant calls it a service charge or a gratuity, or whether it’s a flat fee or a percentage of the bill—if the fee is required of customers, the owner of the restaurant is not bound by tipping regulations in the Fair Labor Standards Act (FLSA). When it comes to doling out the money that’s collected from that fee, the owner can share it with the staff as tip revenue or add it all to the restaurant’s bottom line. If the customer chooses to pay more money on top of their bill, that’s a tip. If the customer has no choice,“that’s not considered a tip under the FLSA,” explained Avery.
Tejas Chocolate & Barbecue co-owner Scott Moore declined to be interviewed for this story because his restaurant’s case is still active, so I drove down to Tomball to see how things had changed since my last visit, in April 2023. Back then, I had the option to leave a tip when I ordered at the counter; when my order was ready, I retrieved it from a counter adjacent to the kitchen and found a table. Last week, there was no option to tip, not even by putting money in a tip jar. A note taped to the counter read, in diminutive font, “All sales are subject to a 15% automatic gratuity fee in lieu of tips,” and continued on to explain that the tips are given to the staff and not the owners or managers. Unlike many of Tejas’s Yelp reviewers, I didn’t complain about the fee, but I did notice that customers were now provided with table numbers and an employee was there to deliver orders to each table.
This fee-collection method for “tipping” requires trust from customers, because an owner who charges a fee like this is under no obligation to turn it over to employees. At Tejas, I asked the gentleman taking my order if there was a way to add a tip, and he assured me that the automatic fee was shared with the staff. By collecting “tips” through a service fee, owners might stave off a future DOL investigation on tipping, so I understand the appeal, but barbecue-joint owners using this method should expect complaints from customers who prefer not to tip.
Whenever a new story comes to light about a restaurant owner under investigation for tipping violations, plenty of online commenters are quick to note how easy the laws are to understand. I was surprised by how much I learned about tipping while reporting this story, but neither owners nor employees should feel like they’re in the dark. In addition to the DOL’s tipping fact sheet, Avery noted that there is an anonymous hotline at 1-866-487-9243 that workers can call to report problems and owners can call to seek clarity about the legality of their own tipping policies. Because it’s best not to wait until you’re under DOL investigation to get your restaurant’s tipping policies in line.
