Question:
I run a small BYOB. I’ve been running without a manager but it’s clear from guest comments that I need a front-of-house manager. I can’t budget for a salary so was hoping for someone who manages at a low salary but also picks up tables for tips. Is that doable?
– Chef-Owner, BYOB, Philadelphia, PA
Answer:
While it seems to make financial sense, on the surface, to have a working manager who is both salaried and tipped, it can get you in trouble from a wage and hour perspective. Servers and other front-of-house employees who see their potential earnings going into the pocket of their supervisor will present problems far greater than any salary savings. Famously, Starbucks lost a 105 million dollar class action lawsuit on this topic due to shift supervisors—who also made and served coffee drinks—sharing in the tip pool. The case is being appealed but the controversy remains.
David Helbraun, a hospitality lawyer with Helbraun, Levey and O’Donoghue, LLP, says, “Generally speaking, managers are not permitted to share in tips. Occasionally serving customers will not entitle a front-of-house manager to pocket tips to supplement a salary. And all in all, trying to save a few bucks on salary and supplementing by improperly sharing servers' tips with management will end up a much more costly venture if caught.”
Rather than combining a salaried and tipped employee into a single position, see if there are other creative (and legal!) opportunities you can explore such as bringing on a part-time manager for peak periods like weekend dinners or working with an advanced hospitality student who you can actively develop into a manager rather than recruiting an established candidate.
More on keeping the management/tipped employee divide here.