Tip Pooling Laws

Does your manager require tip sharing with other employees?

Does your employer deduct credit card fees, customer walkouts or other expenses from your tips?

Are you a waiter who is required to do other types of non-tipped work such as cleaning, maintenance, table setup or food preparation?

Restaurants, car washes and other employers whose employees receive tips must allow tipped employees to keep their tips. The only exceptions to this rule are so-called “tip pools” in which tips are pooled and distributed among various other employees. Tip pooling laws state that tip pooling is legal as long as the tipped employee is paid the server minimum wage ($4.34/hour in 2011) in addition to tips, and the tip pool is not shared with management or supervisory employees, or with employees who do not generally interact with customers, e.g., “back of the house” employees such as dishwashers, kitchen staff, salad preparers, chefs and expeditors. In other words, the only staff members who are entitled to share in the tip pool are “front of the house” employees who serve customers directly such as waitstaff, bussers and hosts/hostesses.

The requirement that employees keep their tips also may apply to involuntary “service charges” or “automatic gratuity charges.” Therefore, employers may be prohibited from mandating tip sharing of these among employees.

It also is important for employees to consider whether they are being paid the server minimum wage even when they are doing non-tipped work. For example, a server required to do cleaning, maintenance or food preparation work – work that does not generate customer tips – must be paid the full 2011 minimum wage of $7.36/hour for this work.

Finally, overtime pay laws entitle tipped employees to premium pay at the rate of “time and one-half” the full minimum wage ($7.36/hour) rather than “time and one-half” the server minimum ($4.34/hour) for each hour worked over 40/week or 12/day.

If your employer is violating these tip pooling pay laws, you (and other employees) may be entitled to a significant award of back pay. Please contact us for a free and confidential case evaluation or simply to learn more about the legality of your employer’s overtime policies.