Instead of having tips, can I implement a profit sharing pool in a coffee shop/restaurant?

UPDATED: Sep 30, 2022

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Instead of having tips, can I implement a profit sharing pool in a coffee shop/restaurant?

I’d like the back of the house cooks/dishwashers to receive equitable pay. It’s not legal to include back-of-the-house employees in tip sharing pools. Can I call it something else on the tip jar, like donation to

Asked on September 9, 2016 under Employment Labor Law, Texas


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

It doesn't matter what you call it--a tip is still a tip is still a tip. The law looks past what you label or call things to their reality, and the reality is that voluntary payments by customers for good service are tips, and are subject to all the laws about tip and tip pools. If you want the cooks & dishwashers to earn more, you can give them raises, give them bonuses, or give them a share of the actual profit of the restaurant (i.e. a real profit-sharing plan).

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