We’ve all seen the rants about customers that don’t tip, or the customers that are so cheap that they don’t tip properly. This post isn’t about rehashing those same tired complaints, even as unfortunately on-the-mark as they are. (Anyone that has been a waiter or bartender can attest to the truth of those anecdotes.)
This is about tipped employees getting their fair share of what they have worked so hard to earn, and about keeping yourself out of trouble if you are a restaurant owner. Starbucks just learned a $100M lesson in California, and employers everywhere need to take note.
Tip Pooling: The requirement that an employee must retain all tips does not preclude a valid tip pooling or sharing arrangement among employees who customarily and regularly receive tips, such as waiters, waitresses, bellhops, counter personnel (who serve customers), busboys/girls and service bartenders. Tipped employees may not be required to share their tips with employees who have not customarily and regularly participated in tip pooling arrangements, such as dishwashers, cooks, chefs, and janitors. Only those tips that are in excess of tips used for the tip credit may be taken for a pool. Tipped employees cannot be required to contribute a greater percentage of their tips than is customary and reasonable.
The basis of the argument in the Starbucks case in California was that shift-supervisors were sharing in the tip pool, which is against California labor law.
In fact, a call to the Richmond District Office of the US Department of Labor verified that it is not California labor law that dictates this, but instead it is Federal law. I was referred to the description quoted above, where only "waiters, waitresses, bellhops, counter personnel (who serve customers), busboys/girls and service bartenders" can participate in tip pools. That’s not to say that other employees can’t be tipped, but they cannot participate in a tip pool.
Employers, take the lesson to heart before it costs you both in back-pay and legal fees! (I’d like to point out here that I am NOT an attorney, but that’s why I called the US Department of Labor to get their opinion. There are always gray areas, and that’s why there was a court case over this. Check with your attorney to make sure you’re covered.)