A Tip Pool Can’t Include Your Manager

If your employer uses a tip pool for you and other tipped employees, it simply means that you pool all tips earned during the shift together. When that shift is done, everyone who contributed splits up the money equally. Everyone still has to earn at least minimum wage, but this does mean that some workers who took in greater amounts of tips will get less, while those who did not pick up as much in tips will get more than they would have if they just kept their own tips.

For that reason, this can be a bit controversial at times, but it is legal. One stipulation, though, is that the money cannot provide compensation to supervisors, managers and owners. It can only go to lower-level employees.

The main reason for this is to keep an owner from creating a mandatory tip pool with the sole goal of cutting themselves in on a percentage of the tips, which they otherwise would not receive. Viewed this way, the tip pool would become a way to tax employees, forcing them to give personal tips to the business, and so it is illegal.

To remove any gray area, the law says that it is illegal even if the manager — or another person in an authority position — directly provides patrons with table service. They still can’t be included in the tip pool. This prevents an owner from carrying one round of drinks to one table in order to be included in the pool.

So, while tip pooling itself is legal, there are ways that using it may violate your rights as an employee. If this happens, be sure you know what steps to take.