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What Every Manager Should Know About Tip Pooling Laws

Fair Practices for Tipped Employees

If you’re a manager, knowledge of tip sharing and tip pooling laws is important. Which tipped employees are eligible for these tip structures? What is the eligibility status for back-of-house employees?

Tip pooling is when employee tips are collected into one fund and then distributed evenly among the staff. This method of tip distribution can be beneficial because it ensures that each employee receives the same amount in tips.

Tip pooling laws stipulate that employees who receive more than 30 dollars in tips per month are eligible for this kind of structure. Tipped employees such as waiters, bussers, and other employees working directly with customers can join in this kind of arrangement.

Employees who don’t regularly receive tips are eligible for tip sharing. These employees include dishwashers, cooks, and janitors. Putting a tip sharing system in place can potentially reduce the risk of resentment between those who work directly with customers and those who do not.

Often the amount of money made in tips by the waiters in the front of the restaurant is significant. By allowing the entire staff to benefit from tips, it can help with workplace relationships and foster a sense of egalitarianism.

In the end, entering into a tip pooling or tip sharing arrangement may or may not make sense depending on who you talk to. However, as a manager, you need to know what each structure entails so that you can stay current on your state’s tip pooling laws. Your non-tipped and tipped employees all matter and it’s up to you to provide them with the best opportunities for fair compensation.