The problem is with "guaranteed" tips.
This is the IRS notices that discusses the law, the regulations, and the extra leeway that is given in 2025 because the change happened in the middle of the year and employers might not be prepared for this season.
https://www.irs.gov/pub/irs-drop/n-25-69.pdf
If a restaurant operates where tipping is voluntary, but all tips are paid out as a tip share, that is allowable for the deduction (with the exception of mandatory tips for large parties -- that is something the employer must keep track of). Where your grandson is in a gray area is because the tips are "guaranteed" -- what exactly does that mean? Just thinking out loud, it might mean:
1. certain employees are guaranteed a dollar amount, and other employees get a split of what is left over. If this case, if there is a night of bad tips, does the back of the house crew get their guarantee and the wait staff get screwed?
2. all employees are guaranteed a dollar amount. In this case, if it is a good night, does the employer keep the extra? If it is a bad night, does the employer make up the difference?
A "guaranteed" tip sounds like a wage to me. I don't know why the employer would do it that way. I can't give you any more practical advice.
