The Two Big Questions About Tips
In bars, taprooms, and tasting rooms, determining who can participate in a tip pool raises two important questions. These questions revolve around whether managers should share in the tip pool and how employees with dual job roles should be treated when it comes to tips. This article will delve into these questions and propose potential solutions to ensure fair distribution of tips while fostering a cohesive team environment. In states like Florida, where there are separate minimum wage amounts for tipped and non-tipped employees, the idea of managers and dual role employees participating in tip sharing can create conflict. We will explore this issue and discuss potential solutions that can help ensure the equitable distribution of tips and help maintain a cohesive team environment.
Conflict with the Minimum Wage Difference: In states like Florida, there are separate minimum wage amounts for tipped and non-tipped employees. Tipped employees receive a lower minimum wage with the expectation of earning additional income from customer tips. However, allowing managers and dual role employees, who usually earn at or above the minimum wage, to share in the tip pool can undermine the purpose of the lower minimum wage for tipped employees. This conflict gives rise to the first big question.
The Question with Managers
At first glance, the answer to whether managers should be included in the tip pool seems simple: exclude them. However, in establishments where managers also perform serving duties alongside servers, such as small businesses with high owner and manager involvement, the situation becomes more complex. When managers engage in traditionally tipped work, like running the bar or serving customers, it raises the question of whether they should be entitled to a share of the tips, regardless of their managerial position.
The Difference with Dual Job Roles
Some employees may have both tipped and non-tipped job responsibilities. These individuals have dual job roles. According to the U.S. Department of Labor, a dual role job refers to a worker employed by one employer in both a tipped and a non-tipped occupation. It is important to distinguish dual role employees from managers who engage in a significant amount of service work since managers are not employed in both roles. The question arises about how to tip dual role employees, who are not fully engaged in tipped work like servers but perform some tipped duties. Including them in tip sharing can potentially undermine the lower minimum wage. If they are included, how should tip sharing be handled when there are servers without dual roles?
Answering the Two Big Questions with Defined Roles
Question 1: Regarding managers, the U.S. Department of Labor provides specific definitions for managerial or supervisory positions. Managers are individuals who have the primary duty of managing the entire enterprise or a recognized subdivision/department. They also regularly direct the work of at least two employees and possess the authority to hire, fire, or have their suggestions regarding hiring/firing given particular weight. Managers and supervisors meeting this definition are prohibited from receiving tips from a tip pool due to their power and higher compensation.
Question 2: Dual role employees are entitled to share in the tip pool for the portion of tipped work they perform. Since they are not managers or supervisors and are employed in tipped work, they can participate. For example, if a shift manager spends 85% of their time serving and 15% managing, their share of tips should reflect 85% of what non-management servers receive. In essence, participants in the tip pool should be allocated tips based on the time spent on tipped versus non-tipped activities.
Managing tip sharing in establishments with diverse team members can be challenging. Managers and supervisors cannot receive tips from the tip pool, as defined by the U.S. Department of Labor. Dual role employees can share in the tip pool, but their entitlement is based on the time spent on tipped work. By considering these definitions and implementing fair allocation methods, bars, taprooms, and tasting rooms can overcome these challenges and maintain a system that benefits both employees and the establishment as a whole.
Because we’re attorneys: Disclaimer. Post updated May 19, 2023.