Though strictly regulated by both federal and state law, tip pooling is one aspect of the food and beverage industry which frequently comes under scrutiny by both governmental agencies and employment attorneys. Previously the US Department of Labor, Wage and Hour Division ruled that under the Fair Labor Standards Act, tip pools can legally only include those employees who “customarily and regularly receive tips.” In March, 2018, a December, 2017 proposal was signed into law mandating tipped employees who are paid the full minimum federal wage of $7.25 an hour (or the state minimum, whichever is higher,) instead of the traditional $2.13 per hour with the difference made up through hourly tips, may now be required to share those tips with non-tipped employees. This was done in order to lessen the wage difference between traditional “front of the house” employees such as servers and bartenders and “back of the house” employees including dishwashers and cooks, who, while just as important to the dining experience, may earn less.
Food and beverage business owners, managers and anyone considered to be in a supervisory position are not allowed to take part in tip pooling. While they can in fact require tipped personnel to participate in tip pooling, they themselves cannot benefit.
In today’s climate of rising food costs, additional new expenses including third-party food delivery services and a nationwide campaign to dramatically increase the federal minimum wage, some employers instead of using tip pooling to equalize pay are using it as a way to pay lower wages to their non-tipped back of the house employees. This practice, while legal as long as the hourly paid rate before tip pooling is either the federal or state minimum (whichever is higher) is seen by many as unethical and duplicit. These employers are taking the original reason behind the updated law and twisting it for their own financial gain.
Providing the greater St. Louis area with quality temporary employees for the hospitality and service industry for now over 20 years, Staffing One Services wishes each and every one of our past, present and future clients a very happy, safe and prosperous New Year!