Tip Pooling, What it Is and The Rules
Tip pooling is commonly the way employers divide tips among employees.
Tip pooling means that tips are shared among a group of employees, rather than being given to just one employee. This is common in restaurants, where servers often share their tips with other staff members, such as bussers or bartenders. Tip pooling can also be used in other service industries, like hotels or salons.
If tip pooling is used in restaurants it typically includes the following staff
- Host/hostess
- Waiters/waitresses
- Busboys/busgirls
- Bartenders
In states where tip pooling is allowed, these are the general rules for the practice
The pool can only include employees who are customarily tipped, such as servers and bartenders.
A manager or supervisor may not participate in the pool.
The business must disclose its tip pooling policy to employees.
Employees must be free to keep all tips they earn.
Tips may not be taken out of an employee’s paycheck or used to pay for any business expenses, paying other employees or customers, or any other purpose except distributing them among employees.
Tip pooling can help ensure that employees who provide good service are properly compensated and that you don’t have a server who is making $150 a night while other good workers are getting less than minimum wage. However, if your state doesn’t allow tip pooling, you may want to look into whether it would be worth changing your state’s laws on the subject so that you can use this tool to improve your business’s efficiency.
The following is a list of states prohibit tip pooling
California
Oregon
Washington
Nevada
Alaska
For waitresses, these are tips for tip pooling
1. Make sure that all employees who are eligible to participate in the pool are aware of the arrangement and agree to it.
2. Keep a record of how much each employee contributes to the pool and how much they receive from it.
3. Pay out the tips from the pool at regular intervals, such as weekly or biweekly.
4. Make sure that all employees who receive tips from the pool are treated fairly and equally
If you feel that your employer is illegally participating in tip pooling, here are things you can do
1. Speak to your manager or HR department in private. You should first try to resolve the issue internally. Bring up your concerns and ask if you can speak to a supervisor or HR representative. If they do not respond favorably, proceed with caution.
2. Gather evidence of the illegal tip pooling. This can include pay stubs, time cards, or other documentation that shows how much you are paid and how tips are divided among employees.
3. File a complaint with the Department of Labor’s Wage and Hour Division (WHD). The WHD is responsible for investigating wage and hour violations, including illegal tip pooling. You can file a complaint online, by mail, or by fax.
4. File a lawsuit against your employer. If you believe that you have been the victim of illegal tip pooling, you may be able to file a lawsuit against your employer to recover lost wages. You should consult with an experienced employment lawyer to discuss your legal options.
