In the previous post I talked about what information an employer must give an employee before using the tip credit to pay that employee less than the regular minimum wage. Employers that take the tip credit can sometimes take liberties with their employees’ tips by forcing the tipped employees to give some of their tips to non-tipped employees. In this post I will discuss when a tip pool is legal and how much control an employer has over the employees’ tips.
The Department of Labor has stated that tips are always the property of the employee that received the tip. A decision from the Ninth Circuit Court of Appeals held that the rules regarding tip pools only apply when the employer takes the tip credit. This means an employer can take an employee’s tip as long as the employer is not using the tip credit. The Department of Labor instituted a rule clarifying that the regulations regarding tip pools always apply to all tips, however a federal court held that the rule exceeded the DOL’s statutory authority and the rule was overturned.
For a tip pool to be legal it must only include employees who customarily and regularly receive tips. To be eligible for a tip pool an employee must make at least $30 a month in tips. The DOL gives examples of some positions that have been recognized as being eligible for a tip pool. These positions include waiter/waitress, bellhop, busboy/girls, bartenders, and counter personnel who serve customers. The DOL also identifies positions that have been recognized as not being eligible for a tip pool. These include janitors, dishwashers and cooks/chefs. Managers are also prohibited from sharing in tip pools. In addition to making sure only eligible employees participate in a tip pool, an employer must notify tipped employees of any required tip pool contribution amount, may only take a tip credit for the amount of tips each tipped employee ultimately receives, and may not retain any of the employees’ tips for any other purpose.
Employers most frequently violate the rule regarding employees who are eligible to be part of a tip pool, and the rule prohibiting taking the tip credit for tips that a tipped employee is required to give to the tip pool.
States may have different and stricter laws regarding tip pools and it is always worth speaking with an attorney who is familiar with the particular laws in your state. If you are a restaurant worker in Georgia who feels that their employee is making you participate in an illegal tip pool then contact Attorney Benjamin Kandy.