9th Circuit Upholds Servers' Tip-Pool Rule

As restaurants across the country debate whether to oust tipping, things are getting a little more complicated for restaurateurs in several U.S. states.

Late last week, California’s 9^th Circuit Court of Appeals upheld a previous 2011 ruling that bans restaurants from making servers and bartenders share their tips with back-of-the-house employees. Such tip-pooling practices are sometimes used to even out the disparity of pay between the front of house staff, who typically earn much higher wages due to tips, and cooks and dishwashers, who only take home a flat hourly rate.

This ruling will impact seven states in particular, where service employees earn the full state minimum, as opposed to the lower tipped minimum, in addition to gratuities—Alaska, California, Minnesota, Montana, Nevada, Oregon and Washington. According to Nation’s Restaurant News, restaurants not in ordinance with this ruling could face some legal risks if they did not change the tip pool policies currently in place.

This situation adds even more fuel to the ongoing debate over how businesses should pay their employees in the face of rising minimum wages. The Radler in Chicago recently implemented an across-the-board service charge in lieu of a tip—this system helps to even out the disparity between pay rates for servers and cooks.