The short answer is yes. Federal law does allow employers to require employees to participate in tip pooling, as long as the tip pool is legal. If your employer has implemented an illegal tip pool, then you are not required to participate in it, and you may also be able to take legal action against your employer. If you suspect that you are being forced to participate in an illegal tip pool, get in touch with an experienced employment law attorney to discuss your legal rights and options.
What is Tip Pooling?
You just got a job as a bartender or waitress, you have an outgoing personality and love to be around people, and you are looking forward to using your social skills to earn good money in tips. After you are hired, however, you find out that you are required to give a portion of your tips to a group of your co-workers. This doesn't seem fair. Why should you have to share money that your customers gave you for your outstanding service to others who did not earn it?
This is the dilemma that many workers in the service industry face, and this is how a tip pool works. Instead of keeping all of the tips you earn, you are forced to chip in part (or in some cases all) of your tips into a collective pool that is then divided among a certain group of co-workers.
There are numerous ways a tip pool can operate. Tips can be divided solely among others who do the same thing as you (such as pooling the tips of waiters/waitresses or bartenders), or they can be shared with other staff, such as hosts/hostesses.
Tip pools can also vary by which shift workers are included. For example, tips may be divided among those working on the same 8-hour shift (e.g., day, swing, or graveyard shift), they could be divided among workers on all three shifts for that day, or they could be divided among those who worked over the entire week. Each establishment decides exactly how a tip pool will be set up, and any of these arrangements are legal as long as all of the other pooling requirements are met.
When it is Tip Pooling Allowed?
There are two main questions that help determine whether or not a tip pool is legal:
Does the Pool include only Employees who Customarily and Regularly Receive Tips?
For a long time, there has been an argument about which employees should be allowed to participate in a tip pool, and many courts had ruled that such a pool could only include “front of the house” employees as opposed to “back of the house” employees.
- “Front of the house” employees are workers who have frequent interaction with customers and receive tips regularly. Examples include hosts, order takers, serving staff, bartenders, and those who refill beverages.
- “Back of the house” employees are those who have no or limited customer interaction. Examples include cooks, dishwashers, bus staff, and those who clean tables before and after an establishment opens.
In March of 2018, an amendment to the Fair Labor Standards Act (FLSA) helped clarify this issue. Under this amendment, a tip pool can now include “back of the house” employees as long as the employer pays each tipped employee at least the full minimum wage. Some employers take what are known as “tip credits”. This means that they pay a tipped employee an amount below the minimum wage because they are expected to more than make up for it with the tips they earn.
If an employer is taking a tip credit and there is a tip pool that includes “back of the house” employees, then this pool is illegal, and you cannot be forced to participate in it.
Do Managers or Supervisors Participate in a Pool?
It used to be that managers and supervisors were allowed to participate in a tip pool as long as the employer was not taking a tip credit. Changes in the law last year prohibited tip pooling with management for all employers, regardless of whether or not they take a tip credit. This means that if any establishment has managers or supervisors taking a share of tips, this type of tip pool is illegal.
Forced to Participate in an Illegal Tip Pool in Alabama? Call Attorney Kira Fonteneau to Review Your Options
If you or someone you know is a tipped employee who is in a pool that you suspect is against the law, there are potential legal remedies available, which may include compensation for tips that were illegally withheld, as well as monetary damages. If this occurred in Alabama, contact attorney Kira Fonteneau to schedule a free consultation by calling (404) 383-5720 or messaging us through our web contact form.