The traditional way for tips to be divided is simply for the waiter or waitress who receives the tip to keep the full amount to themselves. Tips can be left on tables or given through credit cards. Either way, the worker who earned the tip gets to keep it as a direct gift that they don’t have to share with anyone else.
However, some restaurants, bars and other such establishments will use tip pools. Under this system, all employees have to pool their tips together. Once they have a cumulative total at the end of the night, they divide this evenly between the waitstaff. Is it legal to do this in New York?
Workers must know in advance
Tip pools are legal in New York, but there are some regulations. For example, the workers need to know about the tip pool in advance. If a worker believes that they are going to directly receive their own tips, it is unfair to them to be surprised at the end of the night when they find out they were contributing to a tip pool. But if the arrangement is established at the beginning and the staff works under these conditions, it’s legal to use the pool.
Additionally, only the waitstaff – workers who traditionally receive tips – can be included in the tip pool. It absolutely cannot include managers, supervisors, owners or CEOs. If a business owner takes a cut from the tip pool – even if they feel like doing so is justified because they helped the staff – they are violating these labor laws. In a situation like this, the tip pool could be seen as a form of wage theft.
Both sides need to understand what rights and responsibilities they have with this employment issue, along with their legal options in case of a dispute.
