UPDATED: Sep 30, 2022
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I work at a restaurant as a server. We recently began a tip-pool with the non-tipped kitchen staff of 1 of our food sales for each server per shift. The tip-out is ‘voluntary’ but I was told there would be consequences when I refused to partake in the tip-out for the kitchen staff. These people get paid by the hour and some are on salary. Is this legal?
Asked on January 16, 2017 under Employment Labor Law, Colorado
M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney
Answered 5 years ago | Contributor
Restaurants, etc. whose employees receive tips must allow them to keep their tips. However, there is an exception - “tip pools” in which tips are pooled and distributed among various other employees. Tip pooling is legal so long as the tipped worker is paid the prevailing minimum wage in addition to tips, and the tip pool is not shared with management or supervisory employees, or with employees who do not generally interact with customers (e.g., “back of the house” employees such as dishwashers, kitchen staff, salad preparers, chefs, etc.). Accordingly, the only staff members who are entitled to share in the tip pool are “front of the house” employees who serve customers directly such as waitstaff, bussers and hosts/hostesses. At this point, you can contact your state's department of labor for further information.
The requirement that employees keep their tips also may apply to involuntary “service charges” or “automatic gratuity charges.” Therefore, employers may be prohibited from mandating tip sharing of these among employees.
It also is important for employees to consider whether they are being paid the server minimum wage even when they are doing non-tipped work. For example, a server required to do cleaning, maintenance or food preparation work – work that does not generate customer tips – must be paid the full 2014 minimum wage of $8.00/hour for this work.
Finally, overtime pay laws entitle tipped employees to premium pay at the rate of “time and one-half” the full minimum wage ($8.00/hour) rather than “time and one-half” the server minimum ($4.98/hour) for each hour worked over 40/week or 12/day. If your employer is violating these rules, you (and other employees) may be entitled to a significant award of back pay.
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