Are Tip Pools Legal?

 

Learn whether your employer can require you to share tips with other workers.

ADVERTISEMENT -

.
 

Does your employer require you to pool tips? Tip pooling, sometimes called tip sharing or tipping out, is a common practice in establishments where only some employees receive tips directly from customers, especially restaurants. 

In a tip pool, tipped employees put a certain amount or percentage of their tips into a pot, which is then shared among a group of employees. Whether a tip pool is legal depends on who shares in the pool, among other things. 

The general rule is that tips belong to the employee who received them. However, employees can be required to pay part of their tips into a tip sharing arrangement, as long as it meets these legal requirements: 

  • The employer may not share in the tip pool. This includes managers and supervisors. If managers and supervisors receive their own tips for services they directly and solely provide to customers, they may contribute a portion of those tips to the tip pool, but they may not take any money from the pool. 
  • If the employer takes a tip credit, then only employees who regularly and customarily receive tips may share in the tip pool. For example, wait staff, bussers, and bartenders may be part of the tip pool, but "back of the house" employees -- like cooks and dishwashers -- may not. (Employers that don't take a tip credit may allow back of the house employees to take a share of the tip pool, but only if state law allows it.)
  • Only the amount of tips an employee actually takes home counts towards any employer tip credit. In other words, if an employee has to share tips, the employee's hourly wage includes only what the employee got back from the tip pool, not what the employee had to put into the pot. 

ADVERTISEMENT -

Free Overtime Case Evaluation For Hawaii

Do you have questions about whether you're getting the wages you're entitled to in Hawaii? Use the form below to connect with a lawyer through the Nolo / Martindale network of overtime lawyers.
SPONSORED FORM - Nolo/Martindale Attorney Network



Jurisdictional relevance: ST

There are versions of this article for each State.