Every employer requiring workers to participate in tip pooling must be careful to observe the legal rights of employees. While it is true that employers have the right to require workers to pay into a tip pool, they may not do so in ways that violate an employee’s legal rights. Knowing these rights can go a long way for employees such as waitresses, bartenders, cleaning staff and others who deal with tips on a daily basis.

What is tip pooling?

Tips have long been a form of compensation in addition to minimum wage or base pay set by state or federal labor codes for service workers. Many service employees rely solely on tips for the bulk of their income, with some even earning more through tips than through basic wages. An employer may require that service employees contribute a portion of their tips to a pool of income which is then distributed among a group or groups of employees. This is referred to as tip pooling.

Tip Pooling and the Law

The law outlines certain regulations regarding tip pooling. For instance, an employer must never require that the portion paid into the tip pool be more than a customary and reasonable share. Additionally, all tip pooling arrangements must be valid according to law. This is because, generally, all tips should belong to the employee who earns them – not the employer. However, with a valid tip pooling arrangement in place, the employer may pool and distribute employees’ tips, but must observe the legal guidelines for doing so.

One of the main legal guidelines for tip pooling is that employers must not be allowed to be a part of the tip pool. Some states also prohibit managers and supervisor from being included in tip pools as well. Also, employees who do not usually receive tips as part of their compensation cannot be placed in the tip pool. If employers or non-tip earners are included in the tip pool, this could invalidate the tip pool arrangement and violate the rights of tip earners.

What if your tip pool arrangement is illegal?

If you suspect your tip pool arrangement may be in violation of legal guidelines, it’s important to contact an attorney skilled in employment law. Many labor codes outline the limitations involved in tip pooling as well as the rights and remedies available when an employer engages in illegal tip pooling. An experienced attorney, familiar with the labor code in your state, can identify any laws that have been violated and give important advice about successfully pursuing a tip pooling case against your employer.