Tip Pools and Tip Sharing in Restaurants

The laws on “tip pools” and “tip sharing” arrangements are complicated.  Too often, restaurants take advantage of these laws to steal tips from waiters, servers, bussers, and other restaurant employees.  Every year, thousands of restaurants are ordered to pay back millions of dollars to waiters and servers who did not receive their fair share of customer tips.

Here are the basic rules you need to know to protect your right to customer tips or gratuities.

If you are a waiter, server, or busser in a New York City restaurant, your employer cannot require you to share your tips with non-service employees, such as managers, chefs, cooks, or dishwashers.  Tips may only be shared with employees who provide direct service to customers and customarily receive tips.

When customers leave tips in cash, you have the right to take the tips at the end of your shift. You may choose to leave your tips at the restaurant and have them included in your next paycheck.  But the restaurant cannot force you to take your cash tips in your next paycheck.

When customers leave tips on credit cards, the restaurant must pay those tips to you by the next regular pay day.  The restaurant may subtract the pro-rated share of credit card fees from the tips, but the restaurant must include a breakdown between the tips and wages on your pay stub.

Restaurants can require waiters and servers to split their tips with other front of the house employees who provide personal service to customers as a principal and regular part of their duties.  Some of the front of the house employees who may be eligible to share tips from customers are food runners, bussers, bartenders, bar backs, captains who serve food to customers, and hosts or hostesses who greet and seat guests.

Restaurants can also establish a “tip sharing” or “tip pooling” arrangement.  Tip Sharing happens when a waiter or server who is tipped directly by customers shares his or her tips with other employees who participated in providing service to the customers, such as food runners and bussers.  Employees may agree among themselves to have a “tip sharing” arrangement, or the restaurant may set the percentage of tips to be shared with each employee.  The percentage shared with each employee must be “customary and reasonable.”

Tip Pooling happens when employees who receive tips directly from customers put all their tips in a pool, and then the tips in the pool are distributed among all employees who are eligible to receive tips.  Employees may agree among themselves to pool their tips, or the restaurant may require that tips be pooled.  The restaurant may also establish the percentage that each type of worker will receive from the pool.  But once again, only workers who provide service to customers may receive tips from the pool.

If you believe that you are not receiving all the customer tips you deserve, then you should consult with an experienced employment lawyer.  You may be eligible for up to two times the amount of the tips you did not receive.

John Howley, Esq. has more than 27 years of experience and regularly represents restaurant workers in New York City.  Call him directly at (212) 601-2728 to schedule a free and confidential consultation.

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