Are managers allowed to be part of tip pooling? - HR Insights

Are managers allowed to be part of tip pooling?

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Question:

 I recently started as the General Manager of a busy restaurant and noticed that one of our managers is participating in the tip pool with the servers and bartenders. He insists that this is how it has always been done. My understanding is that managers may not be allowed to share in pooled tips. How should I handle this situation to make sure we are staying compliant while also being fair to the team? Are managers allowed to be part of tip pooling?

Answer:

Managers are NOT allowed to participate in tip pools with servers and bartenders. Often managers will run food to tables or help with other server tasks when needed. This does not entitle a manager to be included in a tip pool.

Long Answer

Tip pooling is a popular practice in the restaurant industry, but a policy filled with grey areas and people working hybrid roles can cause confusion and expose your business to compliance risks, increased turnover, or could even cost you your tip credit! So how can we write a tip pooling policy that ensures everyone is getting treated fairly without bending any of the rules?

Step 1: Know the difference between managers and employees

• Managers make hiring/firing decisions

• Managers have employees who report to them

• Managers direct the work of others

If you have servers or shift leads with these responsibilities then it could be time to officially redefine that role and welcome a new manager into the world! An employee that your staff or customers see as a manager being in the tip pool could be enough to generate a complaint or leave your service staff feeling cheated.

Step 2: Understand the rules

• Managers cannot be included in a tip pool

• Managers cannot be paid below minimum wage with tip credit

• Managers CAN keep tips that they independently earn.

As a former line cook I know from direct experience that restaurant managers are frequently helping with service tasks. Running food, taking drink orders, clearing tables, and many other support tasks are part of a manager’s daily life which makes sense why some managers feel like they should be part of a tip pool. However the only time a manager can keep a tip is if they independently serve a table and are given the tip directly by the customer. If a server calls out and a manager ends up working their section all night as long as they aren’t in the tip pool they can still keep tips from their own tables and even contribute a portion of their tips into the tip pool for others to share. Some or all of a manager’s tips can go IN to the tip pool, but they don’t come back out.

Step 3: Clearly written policy

Create a policy that:

• Explains the tip pool calculations

• Defines who is included or excluded

• Outlines how managers serving tables will receive tips outside of tip pool

Detailed and clearly written policies are your best defense against compliance issues. Review your existing tip pool policy and see if there is anything that creates a grey area or breaks the rules. Updating this policy, sharing it with your staff, and following it will keep the risks low and morale high. Mismanaged tip pooling is one of the top reasons why servers quit!

Tip pooling can get complicated and sometimes even create tension between managers and service staff who are all working hard to help the business succeed. Clearly defined roles, good understanding of the rules, and proactive communication with staff are the only ingredients you need to earn a five star review on your tip pooling practices.

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Are managers allowed to be part of tip pooling?

Please note: This information is not legal advice and may not reflect specific state or local requirements.