Tip pooling is the process where food service workers who are directly tipped (such as waiters/waitresses) share some of their tips with service employees who are not directly tipped (bussers or food runners). Importantly, everyone in the tip pool must “touch the table” – or in other words, have provided service to the customers at some point. Here’s a typical scenario: 5 waiters pool their tips to pay 3 bussers and food runners.
A tip pool is illegal if a non-service worker participates, such as a manager or owner.
Is it illegal if a company requires a certain amount be distributed to other workers? Technically, no. A company can mandate a tip out, so long as they are not involved in collecting from a tip pool and the proceeds are not distributed to ineligible workers – like a manager, owner, dishwasher, janitor or any back-of-the-house worker. Employees can also form a tip pool on their own. In this case, employees may be in charge of distributing percentages of tips among food service workers and service employees.
Employers are required to maintain a daily log of all tips collected and paid out in a tip pool for at least six years. Additionally, employers must a list of occupations included in the tip pool, and the share and the amount of tips each occupation receives. These records must be made available to all employees who participate in the tip pool or tip share arrangement. If these records indicate that there are ineligible participants, such as managers, owners, or back-of-the-house workers receiving tips from within the tip pool, your employer may be practicing unlawful tip pool practices.
Please check out the “Tips and Gratuities Frequently Asked Questions” PDF of the Hospitality Industry Wage Order, available at the Department of Labor’s website. You may be owed significant lost earnings.