Are Pooled Tips for Waiters Legal?

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In the United States, most servers work for less than the standard employee and are compensated by tips from customers as expected in the country. However, based on what laws are in effect and when they are implemented, wait staff may be subjected to pooled tips where all the employees share the amount after it has been collected for the day.

Tips in the country are expected for wait staff either as a general rule or, for some, when the individual waiter or waitress has provided exceptional service for the meal. The amount that is tipped reflects these actions, and the server is then compensated accordingly. The amount that is paid above the meal depends on the customer, but there are general customs that may determine a base pay such as ten or fifteen percent of the paycheck. This may be provided in cash or as a number for debit or credit transactions. In every state in the country, cash tips are the employee’s property when given.

Some states provide the entire amount of checks, debit and credit transactions to the wait staff, but others permit the company to remove the credit or debit transaction fee from the overall amount. The rest is the employee’s property just as cash tips are. Unless there is a valid pooling tip policy, the wait staff may not be legally forced to provide any part of the tip to the company. However, some states have given the ability to create pooling policies for tips with wait staff. These states believe this is fairer for all waiters and waitresses. In these situations, only the employees may participate, and employers are excluded.

Tip Pooling, Laws and Stipulations

It is considered legal based on state laws for tip pooling policies created by the company employees work for. However, the employer is not permitted to remove these tips from the wait staff unless laws specifically state it is permitted such as with service fees for credit and debit transactions. Service charges such as those for large tables, private gatherings and even catered events are not required to be provided to employees as it is part of the contract. There is no legal right to these monies, but the company may extend the fees to wait staff as a benefit.

Tip pooling is the collection of part or the entire amount of tips all employees that work as wait staff or servers are provided by customers. These are generally placed into a community pool that is divided evenly or through some other means that the company has determined. Sometime, this amount is extended to more employees than are tipped by customers in the business such as bus persons and those behind the grill. The company that instates these policies feels that this provides a fair compensation for all employees. Even distribution is the goal for everyone involved in the orders.

Other Options by Employers

While tip pooling policies are legal in certain states, it is up to the company to instate them. Additionally, there are other options when determining the best way to keep additional compensation fair and reasonable for all employees of serving class or wait staff. The employees may share tips through a percentage distribution based on a set rate. This may affect the individual through his or her own percentage of tips, sales and receipts received while working during the shift. It is also possible to run both a tip pool and tip sharing for different workers and distribute funds in various other or similar ways.

While employers are not permitted to take what rightfully and legally belongs to the employee, these policies could adversely affect one individual over another. When a great amount in tips has been received by one waiter due to his or her exemplary service, he or she may not feel it is fair having to share the funds with another that provides a poor experience to diners. It may be necessary to speak to management about the situation. However, if the company is treating employees unfairly or is taking money from them, it is time to contact a lawyer.

Legal Support in Tip Pooling

It is crucial to hire a lawyer when the rights of the employee are infringed upon due to tip pooling, income theft or similar circumstances. The legal representative will protect the rights of the client in these situations with tip pool policies and ensure the laws of the state are followed.


Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.

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