Tipping is a common practice throughout the United States. Still, tipped employees may need help to receive fair pay even when receiving a gratuity. One workplace practice that can cause issues is tip pooling. What should workers know about their rights when their employer requires them to pool their tips?
What kind of tip pooling is legal?
The Fair Labor Standards Act allows businesses to require employees to combine their tips with other workers and receive a portion of those combined tips, a practice known as “tip pooling.” Traditional tip pooling – tip pooling that is limited to employees who generally receive tips – can help distribute tips more evenly throughout the workforce. This practice is legal for both workplaces that pay those employees the federal minimum wage and workplaces where employers claim a tip credit.
The tip pool may be shared between tipped and non-tipped employees like cooks, as long as all workers receive at least the federal minimum wage directly from the employer. This is considered nontraditional tip pooling.
What kind of tip pooling does the FLSA not allow?
While employers can require employees to contribute to a tip pool, some situations are prohibited by federal law. Examples of illegal tip pooling include:
- An employer receiving a portion of the tip pool
- Managers and supervisors receiving a portion of employees’ tips
- Employees who receive less than minimum wage sharing a tip pool with employees who receive at least the federal minimum wage
These practices can limit tipped employees’ ability to receive fair pay.
What can you do if your employer engages in wage theft by improperly tip pooling?
If you believe that your employer has engaged in wage theft when pooling tips, you can take steps to protect your rights. Documenting information about tip pooling in your workplace and the pay you receive can support a claim. You may also want to speak to an experienced attorney to better understand your options and how you can hold your employer responsible. You may be able to obtain both liquidated (double) damages and attorneys’ fees in some cases of wage theft.