In general, tips are provided directly to the employees who earn those tips. These may be paid on a credit card, as a portion of the bill, or cash may be left on the table. When a business has multiple tipped employees, they will all take their own personal tips home.
But in some cases, a business owner may decide to use a tip pool. This simply means that all of the tips earned by any eligible employees get pooled together at the end of the day. These tips are then divided evenly. If a staff of five took home $500 in tips, for example, each person would get $100 – even though one server may have only earned $50, while another earned $200. When using this system, there are some important regulations that must be followed.
Only employees can be included
First and foremost, only the employees who are earning the tips are eligible to be included in the pool. If the business owner includes themselves in the pool, it could be a form of wage theft. Supervisors and managers should not be included, either.
Employees need to be informed in advance
Next, it’s important for employers to tell their employees that they’ll be using a tip pool in advance. Pools are legal, but employees need to know upfront so that they can decide if they want to work under those conditions.
Employees still deserve minimum wage
When using a tip pool, it’s important to ensure that all employees still get the minimum wage. They need to average at least minimum wage when combining their paid wages and their tips. Dividing the tips in a pool cannot bring any of the employees under that average.
Tip pools sometimes lead to disputes. Those involved need to know about all the legal options they have.
