Tuesday, January 20, 2009

The Legalities of Tip Sharing

There is a great degree of variance among the ways that different companies compensate their employees, including the source of employee income as well as the amount of pay for work. In many industries, employers calculate tips as part of an employee's earned wages, and in these instances, employers can pay their employees less since they are receiving compensation from another source.

In some industries, employees who receive tips as part of their earned wages are expected to participate in tip sharing or tip pooling-a system in which all earned tips are combined and divided equally among tip-receiving staff members. While this does a good job of ensuring sufficient compensation for all workers, there are a number of strict regulations governing precisely which workers can receive tips from a tip pool.

Who Is Eligible for Tip Sharing / Tip Pooling

For tip sharing to be legal, employment laws state that tips can only be collected from and shared amongst workers who provide a direct service to the patrons of that industry. One of the easiest examples of this can be seen in the restaurant industry.

In a restaurant setting, employees who would be eligible for tip sharing would include

· Waiters / waitresses

· Bar staff

· Hosts / hostesses

· Captains

· Busing employees

Since all of these workers provide a direct service to restaurant patrons, they are in a position to take part in a tip pooling system. Employees who would not, however, be able to legally participate in tip sharing / pooling would include

· Chefs

· Dishwashers

· Managers / supervisors

Abuses of Tip Sharing / Tip Pooling

In many companies, employers will attempt to reduce the amount of money they have to spend on employee wages by including employees who are not eligible for tip pooling as part of a tip pool. By doing this, employers deprive workers that serve patrons of their hard earned money and reduce employee salaries across the board.

Managers who require their employees to share their tips with ineligible employees are guilty of violating employment law and can face legal action from employees who are seeking compensation for lost wages.

If you suspect that your employer may be instituting illegal tip sharing in your work place, or for more information on the legalities of tip sharing / tip pooling, contact Los Angeles employment attorney Perry Smith today.

Joseph Devine

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