Tip Sharing for Managers Can Create Problems
For bars, taprooms, and tasting rooms that pay serves at the “minimum wage for tipped employees” rate, there is a common question: Do managers get to share in the tip pool?
Florida and many other states have two different minimum wage amounts–a minimum wage for non-tipped employees and a minimum wage for tipped employees. In Florida, in November 2020, the minimum wage for no-tipped employees is $8.56 per hour and the minimum wage for tipped employees is $5.54 per hour. The minimum wage for tipped employees is lower than the minimum wage for non-tipped employees, on the presumption that these employees are receiving tips paid by customers in addition to their minimum wages paid by the employer. However, that justification behind a lower minimum wage for tipped employees is undermined if managers–who are most often paid at or above the minimum wage–are allowed to share in the pooling of tips.
In bars, taprooms, and tasting rooms, it’s common for “managers” to do as much serving as the servers. In factor, the only person behind the bar might be a “bar manager” or a “shift manager.” Naturally, that person should certainly be able to share in the tip pool, particularly for whatever comes in while he or she was the only server. But how should a tip pool be handled for times when there two servers working, one of whom is a “manager” and the other one is not?
The Solution to the Tip-Sharing Problem is Math
The US Department of Labor (DOL) says that, for a managers role must be divided between “manager” duties, which are not tipped) and “server” duties, which are tipped. DOL has ruled “a dual-job employee may continue to receive tips when he performs tasks incidental to his usual [i.e. tipped] job, but may not receive tips “where there is a clear dividing line between the types of duties.” U.S. Dept Labor, Wage & Hour Division, FLSA2018-27 (Nov. 8, 2018).
Based on DOL’s guidance, bars, taprooms, and tasting rooms should follow these tips (pun intended):
Tip #1: Decide what portion of the shift manager’s job is generally “management” and what portion is generally “serving.” It might be that shift managers really don’t “manage” at all. They might be 100% focused on serving, but they are called “managers” because they are generally more responsible and/or better servers. Whatever the case, assign a percentage for management (which could be zero) and a percentage for serving.
Tip #2: Allocate more of the head manager’s job to management than to serving. When assigning “manager” titles, make the titles mean something. A “head manager” should be doing more managing than a “shift manager,” even if both of them are also doing some serving.
Tip #3: Head managers and shift managers should get a smaller piece of the tip pool than servers. If a shift manager’s job generally breaks down to 85% serving and 15% managing, then his share of the tips would be 85% of the share that the non-management servers get. A head manager should get a smaller share of the tip pool Essentially, all of the participates in the tip pool should be weighted based on the percentage of time they spend serving versus non-tipped activities.
Tip #4: Write it down. Whatever method you come up with, document it in your company handbook. You’ll want to keep some record that you are employing a rational basis for how to determine the allocation of tips in the pool.
Do you have questions about sharing tips with bar managers? Contact us at email@example.com to schedule a consultation.
Because we’re attorneys: This blog post is provided on an “as is” and “as available” basis as of the date of publication. We disclaim any duty to update or correct any information contained in this blog post, including errors, even if we are notified about them. To the fullest extent permitted by law, we disclaim all representations or warranties of any kind, express or implied with respect to the information contained in this blog post, including, but not limited to, warranties of merchantability, fitness for a particular purpose, title, non-infringement, accuracy, completeness, and timeliness. We will not be liable for damages of any kind arising from or in connection with your use of or reliance on this blog post, including, but not limited to, direct, indirect, incidental, consequential, and punitive damages. You agree to use this blog post at your own risk. Regarding your particular circumstances, we recommend that you consult your own legal counsel–hopefully BrewerLong.