Know When Tip Pooling Works

How to Know When Tip Pooling Works

In a restaurant, managers wear many hats. From last-minute electrician to table busser during a rush, the roles management takes on keep the operation running. Because of their unique vantage point, managers can also identify when a policy makes sense for a restaurant, like tip pooling.

Tip pooling continues to be a prickly point for restaurants. If you’re a supervisor, you have a unique bird’s eye perspective to know if it works.

If the restaurant owner and you are talking about instilling a tip pooling policy, or if you’re reviewing an existing policy, take a moment to review the pros and cons of tip pooling. According to the law, you are allowed to require tipped employees to contribute their tips to a pool. But if your restaurant environment isn’t conducive to tip pooling practices, then your staff might go from cheerful to disgruntled. And even worse, you might start losing your top-earning servers.

This article takes a look at the pros, cons, and various options for dealing with tip pools at restaurants.

Tip Pooling Can Make Hard-Working, High-Earning Staff Resentful

Every restaurant has a few top servers who are natural-born sellers. They know how to sell top-shelf bourbon and daily specials get 86-ed a couple of hours after their shift starts. These are the servers whose bills are the highest, with tips that reflect their upselling.

Then there are servers that are dedicated to their tables. Orders are rarely forgotten, and diners leave feeling as though they’ve gotten special treatment. For their attentiveness and charming faculties, these diligent servers also take-home high tips.

And some nights, a server gets a large party, works hard throughout the night, and earns a high tip compared to other employees on duty.

What could go wrong with tip pooling in this type of restaurant environment?

Hard-working, high-earning staff do not want to share their tips with servers and bussers who are not earning as much. This feeling is even stronger when underperforming (or lazy) staff members are taking home more than they deserve. Although top-performing servers carry the shift in these scenarios, they leave with less than deserved.

Cons of Tip Pooling

  • High earners take home less at night.
  • Lazy workers get covered.
  • Dishonest staff may pocket a portion of their tips or take more from the tip jar than is fair.
  • There is the possibility of an unfair distribution of tips.
  • The staff may become angry and care less about their performance.

Tip Pooling Can Make a Team Stronger in Restaurants

Having an unfair tip pooling policy can spark resentment among employees. In an interdependent environment, though, tip pooling encourages harmonious working relations. Any manager would agree that the benefits of having a happy team with good relationships permeate all areas of work-life, especially productivity.

When the team relies on every person on duty, from the moment a customer enters the building to the point of departure, every person is contributing the same amount of energy—thereby deserving equal tips.

Identifying your team as interdependent is the first indication that tip pooling might benefit staff. When it’s the right restaurant environment, tip pooling can improve working relations among staff. Employees take greater pride in performing even the smallest tasks, knowing that the overall result is better tips.

The Benefits of Tip Pooling

  • The sense of teamwork may improve.
  • Staff is more inclined to help each other.
  • Side work is not neglected.
  • Staff takes greater care with overall presentation, keeping the restaurant cleaner and tidier.
  • Less annoyance may arise over table section assignments.

When tip pooling is a conducive method of tip distribution, the staff is friendlier and works better—as a whole and as individuals. Managers who identify the correct times to rely on tip pooling reap the rewards with higher sales and more returning customers.

Creating a Tip Pooling Policy That Works

Get the opinions of all supervisory staff members before making a final decision. Go over the pros and cons of a tipping policy, as described above, and make the decision as a team. If your restaurant operates in a way whereby everyone would benefit from tip pooling, without employees feeling cheated, then give it a shot. Your staff might not only benefit greatly from the change, but the working atmosphere could improve too.

First, confirm that you are complying with US tipping pool laws:

  • The majority of states allow employers to require tip pooling among a group of employees. Those subject to pooling must give a portion of their tips to the pool.
  • Employers must devise reasonable policies.
  • Employees must be able to retain the full minimum wage at the very least, and they cannot be required to contribute any sum that counts toward their minimum wage.
  • Employees included in a restaurant tip pool must usually receive tips.
  • Employees cannot be required to give tips to a pool including employees whose incomes rely on flat hourly wages, such as dishwashers.
  • Employers, managers, and owners are exempt from entering the tip pool.

You can find more information on laws governing restaurant tipping here.

Who Can Be Included in Tip Pools?

As you read above, employees who usually receive restaurant tips may be included. That includes employees who make at least $30 a month in tips.

Nonetheless, including everyone who earns tip money, particularly shared tips, might not be a good idea. For example, if your host or hostess is earning roughly $10 an hour and does not play an integral role in the food distribution process, consider giving her a small percentage of overall tips. Her hourly wage is substantial without relying on tips. This leaves more in the pot for employees who are working directly for tips.

  • Alaska
  • California
  • Minnesota
  • Montana
  • Nevada
  • Oregon
  • Washington

How to Split Tips Evenly Among Restaurant Staff

Tip pools can be divided a few ways. There is the traditional tip jar. Whatever is earned during a shift gets put into the tip jar, and then this amount is split evenly. Just be careful of sticky fingers with this one; some dishonest employees might take advantage.

Splitting tip wages by the hour is popular, although it’s not considered the best method. This is how it works:

All tips (cash and credit) are accumulated into one pot, and the sum is totaled. The total number of hours worked for the day is divided by the tip pool sum. This number is the “hourly tip wage.” Each server then gets tipped how many hours were worked that shift, multiplied by that day’s “hourly wage.” Unfortunately, this can leave high earners with empty pockets at the end of the night. Hourly tip pool payouts tend to make people uncomfortable.

Instead, create a tip pool based on the team shift. Schedule employees of an interdependent team for the same time shift so the wages are split evenly. If it’s not possible to create such a rigid schedule, then require just a percentage of tips to be included in the pool. This ensures that no one leaves empty-handed or short-changed.

The most egalitarian way to split tips among restaurant staff is to create a point system. Each role gets a certain number of points based on how much work they put in. For instance, servers get 10 points, while bussers get 5. The tips pooled at the end of the shift are then split according to points.

Scroll to Top