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What is tip pooling and is it legal? 

| Feb 11, 2021 | Wage And Hour Claims

If you work for tips, you know how important they are. They determine your wage. Employers are not allowed to pay under minimum wage, of course, but they can credit your tips toward that minimum wage. This means they can pay you less than the minimum as long as you still make at least the legal amount for that year, and you can earn even more when your tips exceed that number. 

Pooling, then, is the process of putting tips from numerous employees into one central pool. They are then split back up among the employees who worked together for that shift. This is a legal process as long as employees are informed in advance that this is going to happen and as long as they still make the proper amount when considering their tip credit. 

How does tip pooling work?

If you’re unsure of your employer’s specific tip pooling guidelines, be sure to ask. In general, though, it works like this:

  • Three employees work the same shift together. All tips are collected and pooled.
  • Employee A makes $400 in tips. Employee B makes $200. Employee C, however, only makes $60.
  • After the tips are pooled, they amount to $660 total. Split three ways, this means that each employee gets $220.

You can see why tip pooling is sometimes a contentious topic. While Employee C would be thrilled, Employee A would likely want to keep their own tips. 

Are there potential issues with tip pooling?

Have you noticed issues with the way tips are handled or how much you’re paid? If you think it’s a wage and hour violation, our experienced firm can help you explore your options.