Friday, March 26, 2010

Tipping And Tip Pooling

free tips

In recent weeks, the subject of employee tipping has received considerable attention in the media. There have been lawsuits in California, Massachusetts, and other states which should serve to remind employers about the importance of knowing and then following State and Federal laws on tipping.
In California, there are three critical rules which must be followed by employers:
1. No manager may take any portion of a tip left for an employee;
2. An employer may not offset any credit card processing fee against a tip left by a customer for an employee; and
3. Absolutely no portion of any tip received by any employee may be offset against the minimum wage of $8.00 per hour paid to an employee.
It is worth noting, however, that in California, a service charge by the business owner is not considered a tip for purposes of the California Labor Code provisions dealing with tipping.
There is still some controversy in California concerning the subject of tip pooling. Tip pooling is not automatically illegal in California. The controversy arises over what type of tip pooling arrangement is allowed.
The California Division of Labor Standards Enforcement has traditionally took the strict view that in order for an employee to participate in the tip pool, he or she must render direct table service. Such a rule is both artificial and unworkable.
Take for example, the customer who orders a drink from his table. Should it make a difference in any tip pooling arrangement whether the bartender brings the drink to the table or whether the server delivers the drink?
Another example - in those restaurants where the cooking of the food is in plain view of the customers, should the cooks be prohibited from having even a small percentage of the tip?
Finally, if the dishes on which the food is served are not clean, then the customer will not enjoy the dining experience. Thus, should the dishwasher receive a tiny percentage from the tip pool?
In recent years, the Courts, especially the Federal Courts have rejected the artificial "direct table service" distinction. Rather these decisions leave it to the restaurateur to adopt a tip pooling plan. So long as that tip pooling plan is reasonable, it is likely to be upheld by the Courts. Obviously, the server should get the lion's share of any tip, with smaller percentages going to those who participate in the dining experience.
Given the attention that tipping and tip pooling has received in recent weeks, this is a good time for all employers to review their tipping and tip pooling practices to ensure that such practices are consistent with both State and Federal law.

Article Source: J. Thomas, Jr.

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