Tip pooling is typically the collection of all tips from directly tipped employees so that they may be redistributed among a larger group of employees. Pools are generally considered legal when designed by employees themselves, and with distribution based on the level of service or amount of customer contact.
California: Tip-sharing (pooling) arrangements that provide equitable distribution of gratuities among co-employees, even those who did not directly serve a patron, are permissible in California. Just make sure that employers and supervisors do not share in the tip.
Gratuities are a significant part of the compensation for restaurant servers. Several restaurants have implemented a process where gratuities are pooled among individuals that have contributed to the service experience. The distribution of those pooled gratuities is dependent on the structure of the organization.
Tip Sharing (or tipping-out) differ substantially from tip pooling in that the distribution rates are generally recommended by the employer, and are generally accepted to be incidental to total tips received. These tip-out rates are normally a percentage of tips, sales, or category receipts.
Did any restaurant ever abuse tip pooling for its own benefit?
Starbucks was recently the unlucky recipient of a $105 million dollar California judgment for purportedly including supervisory staff in their tip pool.
Mario Batali, Joe and Lidia Bastianich, and their company Pasta Resources Inc. agreed to pay out $5.25 million in a class action settlement in response to labor lawsuits.
The only advantage for a restaurant for pooling the tips, which are given by patrons to the servers is to have control over the tips. Not sure why restaurant owners want to have control over what is given to servers. Do they have a better solution to redistribute it? Are they smarter than the waiters and have a better and fairer way to distribute it? There is nothing to prove it, and I think that it is more a danger for the servers as if the restaurant take the tips, and mismanage his money, and as a result go out of business, the server will never get their tips.
I have worked in restaurants where they pool the tips, and I do not think that restaurants have any clue of what is fair to the servers. Even though a server has been in a restaurant for 10years, even though someone just come on board, both waiters will make the same money. THIS IS LUDICROUS.
A major problem with tip pool as well is that everybody gets paid the same, servers, busboys, food runners, thus that you work hard or not you get paid the same, thus this system does not encourage employees to work hard. No matter what you get paid the same if you work hard or if you do the least amount of work. Thus many employees will abuse the system and do the least amount of work, knowing that they will get paid the same. Why sweat when you can be paid while you talk with your colleagues.
With tip pooling the hardest workers are penalized as they get paid the same as the laziest workers. The diners are also penalized as they many employees are not encouraged to work hard. Those lazy employees think about themselves, but not about the fact that patrons spend money and expect great service.
Employers have no clue on all of this since most do not understand hospitality, and what employees feel. I have never seen a restaurant asking for employees' feedback. Employees would not feel comfortable in telling the truth anyway since they may fear retaliation if they speak up.
There is no need for a restaurant owner to pool the tips, unless they want to control what servers make and they think they are unable to do things by themselves. I have to admit that in many restaurants employees are treated as kids and dummies so thatmight be a reason for restaurant owners to pool tips.
As we have seen in the lawsuit cases above, when restaurant owners pool the tips they have a hand on it and may very well abuse of the system and lkeep some money which is ILLEGAL.
In some restaurants they go as far as PAYING MANAGERS with the tips given to the waiters. This practice is ILLEGAL IN THE STATE OF CALIFORNIA. As you can imagine it does not make any sense that a waiter pays a supervisor. But some restaurant owner feels the need to steal the servers' gratuities so they do not have to pay their managers.
I have seen restaurant pooling the tips and one day as servers came to work, they saw a notice that the restaurant was closed indefinitely. What do you think happened to their tips? THEY DID NOT SEE A PENNY.
So if you still think that pooling the tips is the best practice at a restaurant feel free to let me know, but I think it is well too dangerous for hard working servers to be part of a restaurant that tip the pools.