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Is it legal to use a tip pool?

On Behalf of | Mar 6, 2023 | Employment Law

A tip pool is a situation wherein all employees are instructed to combine their tips at the end of the night. This system is often used in restaurants and bars, allowing the waitstaff to engage with customers at any table that needs attention. When the restaurant closes, the full tip amount is divided between all the employees evenly.

This is a somewhat controversial process. Many employees like it because it makes things simple. But others do not approve of it because they would like to receive 100% of the tips that they are given by the patrons that they serve. A worker who is given more tips may feel like they are being unfairly treated if a portion of those tips is essentially given to a worker who did not earn as much.

For instance, say there are three workers. One collects $100 in tips and the others each collect $25. The total of $150 would be split three ways, giving each worker $50. Two workers would be pleased, but one would not. Is it legal for a business owner to approach tipping in this way?

Tip pools can be used for workers

Yes, tip pools are legal, but there are some stipulations. For one thing, employees need to know that they are being put into a tip pool before they start earning. Their boss cannot simply claim all of the tips at the end of the day and then create a pool without notifying them in advance.

Another thing to consider is that managers, supervisors and company owners are not allowed to be included in the tip pool. A tip pool can only be used for waitstaff and support staff, like bussers. Even if the owner is at the restaurant and technically does help the staff by carrying something to a customer’s table, they cannot be included in the tip pool. If they are, it could be a form of wage theft.

Tipping situations can become complicated and sometimes contentious. Those involved need to make sure they understand their legal rights.