The laws attached to tip pooling may be different now than when you were hired. Before March 2018, tip sharing was allowed to take place as long as employers paid their tipped workers the regular federal minimum wage ($7.25). The 2018 lawFAB 2018-3 reiterates that employers, managers and supervisors are never allowed to take employees’ tips except for a valid tip pool.
This tip sharing was titled “tip pooling” in the 2018 law—another reason to focus more on the practice in your workplace rather than what it’s called.
The biggest question to ask yourself is: after sharing or dividing my tips, am I making less than federal minimum wage ($7.25 hourly) including take-home tips? If the answer is yes, we can help. (It's important to note that minimum wage varies in different locations; check your state or city for their minimum wage laws.)
The definition of tip pooling is when the total amount of tips earned is divided among non-supervisory staff members. For example: waitresses at a restaurant may put together all their tips after a given shift and divide the total evenly.
A legal tip pool may require tips to be shared among:
- Servers
- Bartenders
- Bussers
- Counter personnel
- Lower level kitchen staff (dishwashers, cooks, etc.)
A tip pool must always be a prearranged agreement that all employees are aware of; usually it would be included in the employment contract or a notice given to the employee at the time they start employment. Some see it as unfair because coworkers who were perceived as less efficient or hardworking receive equal compensation to the more competent employees. However, tip pooling is legal and there’s no law requiring the amounts of tip pool distributions to be based on merit.
Under no circumstances may an employer require tipped employees to share their tips with a manager, supervisor or owner (or “the house”). When management or ownership participates in the tip pool, this is illegal and likely means that everyone who was required to pay into the illegal tip share is owed significant damages.