Beware the tipping point: Setting up tip pool often requires expert legal advice — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily
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Beware the tipping point: Setting up tip pool often requires expert legal advice

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in Compensation and Benefits,Human Resources

Restaurants that use tip pools and rely on the tip credit to justify paying their employees $2.13 per hour rather than the minimum wage of $7.25 per hour often grapple with which employees can be included in the pool. It’s not always clear.

For some positions like bartender, eligibility to participate in a tip pool depends on how a particular restaurant operates, whether employees in the classification typically receive tips or have direct contact with customers.

Recent case: Mi Tierra Café and Bakery used the tip credit exemption to the Fair Labor Standards Act to pay employees $2.13 per hour. It also used a tip pool, distributing gratuities to various kinds of em­­ployees, including servers and service bartenders.

Virginia Barrera sued. She alleged that by including service bar­tenders (who do not interact directly with customers, but who do work behind a bar visible to customers in the dining room), the restaurant had included employees who should not have been part of the tip pool. She argued because the service bar­tenders did not interact with customers directly, they did not meet the requirement of being “typically tipped.”

The court refused to rule that including service bartenders automatically destroyed the tip pool. Instead, it ordered a jury trial to decide whether the bartenders who were visible somehow contributed to customer tipping. (Barrera v. MTC, No. SA-10-CA-665, WD TX, 2011)

Final note: Get expert guidance when setting up a tip pool and de­­cid­ing who should be included.

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