Tip Pool & Tip Sharing Claims

Tip Pooling - Tip Sharing

The federal minimum wage is currently $7.25/hr. Despite this, federal law allows employers to pay “tipped employees” (i.e. servers, waiters, bartenders, bussers) as little as $2.13 per hour so long as certain conditions are met.

First, the employer must notify its servers that it will take a “tip credit” against its minimum wage obligations. Second, the server must regularly receive at least $30 per month in tips.

Finally, the server must be allowed to keep all of his or her tips – except those which are shared with other ‘tipped employees.’ The tips plus wages combined must add up to at least the $7.25 per hour. These requirements are strictly construed.

If your employer fails to comply with all of these requirements, they are not permitted to claim a tip credit against their minimum wage obligations. The result is that they will forfeit the tip credit for each and every hour that you worked in the last 2-3 years.

Some states have a higher minimum wage rate than what federal law requires, and some have a higher tipped wage rate. Other states do not permit an employer to claim a tip credit against their minimum wage requirement — in other words the employer must pay the employee the full minimum wage.

Common Violations

  • The employer participates in the tip pool (i.e. the employer keeps some of the tips)
  • You must share tips with: kitchen workers (i.e. kitchen chefs, cooks, salad preps, line guys, dishwashers, pastry chefs, etc.)
  • You must share tips with managers
  • You must share tips with cleaning crews, cashiers, valets, or other employees who do not have direct customer interaction
  • You must share tips with House moms and DJs
  • You must share tips with bouncers and security guards

Failure to Give Notice

Your employer must explain that they will take a tip credit against their wage obligations.

These types of tip pool violations are commonly found in bars, restaurants, strip clubs, hotels, and casinos. For instance, a dealer who receives tips (or tokes) from a customer should not be required to share those tips with floor supervisors, the ‘cage,’ or other employees who do not have direct customer interaction. Similarly, exotic dancers should not be required to pay a house fee to dance at the club or share their tips with managers, DJs, the ‘house mom,’ etc.