Question:
HELP! We have a restaurant that is primarily counter service, so we pay our cashiers, bussers, dish washers, cooks, etc. a living wage. They still get tips though, but not as much as normal table/full service. Our staff shares its tips with everyone (dish/cooks/bussers/oyster shuckers/prep and managers). Our salaried managers get paid well over our hourly employees, but they take a full cut of the tip share. Besides it being ethically wrong, is it legally wrong?
– Kelley, Admin, S.O.S. Seafoods
Answer:
As a back of house guy, I always wished I could be tipped, walking out of a shift with cash rather than eagerly anticipating the next paycheck. As much as it might be appealing and egalitarian to have your tip pool include everyone—cooks, servers, managers, bussers and so on, it is definitely a violation of the Fair Labor Standards Act (FLSA):
“The requirement that an employee must retain all tips does not preclude a valid tip pooling or sharing arrangement among employees who customarily and regularly receive tips, such as waiters, waitresses, bellhops, counter personnel (who serve customers), bussers, and service bartenders. A valid tip pool may not include employees who do not customarily and regularly received tips, such as dishwashers, cooks, chefs, and janitors” (emphasis mine).
To be sure, an increasingly innovative foodservice operation breaks down many of these traditional barriers and job categories. For example, an oyster shucker at a raw bar is doing both food preparation and guest service. Some would argue he should be tipped—others would disagree. A lead barista in a coffee shop who serves guests but also has supervisory responsibilities (cleaning checklists, expediting orders, void codes) but who is not considered a manager for hiring, firing and performance evaluations is in a similar gray area. Famously, Starbucks is involved in a lengthy legal battle over whether managers—and which type of managers—can participate in the tip pool.
So short answer is don’t include non-service employees and never include management in the tip pool. If you identify gray area employees, talk to your lawyer.
Finally, there are some state-by-state exceptions in states like California, Minnesota, Oregon and Washington, specifically where there is no tip credit (separate tipped minimum wage). I previously addressed that here.