Can we require waiters to pool their tips with the dishwashers and cooks?

Related Ads

Need Professional Help? Talk to a Lawyer

Enter Your Zip Code to Connect with a Lawyer Serving Your Area

searchbox small

Question:

I'm the personnel manager at a local chain of pubs, and I'm looking for ways to save money. We are legally allowed to pay a lower minimum wage to employees who earn tips, like wait staff and bartenders, as long as they earn enough in tips to bring the take-home pay to at least the full minimum. If we require tipped employees to pool their tips with the back of the house (dishwashers and cooks), can we pay everyone the lower minimum wage? Our customers tip well, so everyone will still be taking home at least the full minimum hourly wage. 

Answer:

The rules for tipped employees are fairly confusing, but your proposal is a couple of steps across the legal line. In most states, an employer can require certain employees to pool or share their tips (often called "tipping out"). However, this is allowed only among certain employees and in certain circumstances. 

You have the basic rule of tips right: It is perfectly legal -- in most states -- for an employer to pay tipped employees less than the regular minimum wage per hour, as long as the employee earns enough in tips to make up the difference. Please note the "in most states," because this practice (called taking a tip credit) is not allowed in some states, including California. However, as long as your state's law allows it, you may pay a lower hourly wage to tipped employees. 

In most states, you may also require employees to share or pool their tips with other employees. In a tip pool arrangement, all employees subject to the pool have to chip in a portion of their tips, which are then divided among a group of employees. The employee must be able to keep at least the full minimum wage. (In other words, if the employer takes a tip credit, the employer can count only the tips the employee gets to take home against its minimum wage obligation.)

According to the federal Department of Labor, only employees who regularly receive tips can be part of the pool. Employees can't be required to share their tips with employees who don't usually receive their own tips, like dishwashers or cooks. Some states have stricter rules for tip pools. 

As you can see from this discussion, your plan won't pass legal muster for two reasons: First, you may claim a tip credit against wages (that is, pay an employee less than the full minimum wage) only if the employee earns tips. Dishwashers and cooks don't earn tips, so you can't claim a tip credit for these employees. Second, you may not set up a tip pool that includes employees who don't earn tips themselves. This means no dishwashers and cooks in the tip pool. 

Find a Lawyer
Get Professional Help

For legal advice, you'll need to talk to a lawyer.

Talk to an Employment Lawyer

LA-NOLO4:DRU.1.6.2.20140813.27175