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Everybody in the tip pool

Question:

I have noted several (newly opened) full-service restaurants using mandatory tip pooling. Washington doesn’t allow for any offset to its high level of minimum wage, making waitstaff compensation very generous. Is this tip pooling a trend or anomaly?

– Kevin Clark, Owner, Argosy Cruises, Seattle, Wash.

Answer:

I wouldn’t say tip pooling across both the back and front of house is an anomaly but it is a local phenomenon. The reason for it becoming a trend specifically in your state is that it is illegal in most others.

Laws vary by state but in most cases, tip pooling can include only tipped employees such as servers, bartenders and bussers, can never include management, and no administrative fee may be assessed. If required tip-outs to bussers and bartenders drop an employee’s wages below the non-tipped minimum wage, the employer must make up the difference. Required tip-out percentages must be disclosed to employees.

Important exceptions, as you note, are the states of California, Minnesota, Oregon and Washington, where there is no “tip credit” for employers. That means that there is no distinction between the tipped minimum wage and state minimum wage—all employees are paid full minimum wage or higher. Since all employees are receiving at least the minimum wage, courts in Oregon and Washington have ruled that tips could be shared with employees not directly involved in service, such as cooks and dishwashers, as long as management and ownership do not participate.

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