It makes sense to divide the tips traditionally given to employees who work with customers if they work together to achieve a common goal.
The pooling of tips is an excellent idea for any counter or quick-service restaurant. This is a good policy for restaurants that are introducing new business models, such as curbside service or delivery by their staff. However, tip sharing and tip pooling can be controversial among restaurant staff. Some seasoned servers might not be happy to give up their tips to newer employees, especially if they earn less. Before implementing tipping policies, ensure you have discussed them with your staff and gained their buy-in.
What is tipping pooling?
Tipp pooling combines all or part of the tips and distributes them fairly to all employees at the shift’s end. Tip pooling ensures that the back-of-house team benefits from dividends earned throughout a change. Tip Pooling Laws allow employers a “tip credit” of up to $5.12 an hour from employees’ tips to offset their minimum wage obligations. Note that if the employer retains any suggestions or requires the employees to share them with other employees who are not tipped, they cannot take the tip credit. They must pay the total minimum wage amount.
What is the difference between tip splitting and tip pooling?
Tip splitting differs from tip pooling in that it is entirely voluntary. It does not follow the same guidelines as tip pools. Tip pooling is the practice of pooling a percentage or amount collected from tips and dividing it among all employees who are not salaried.
Employees can informally agree to a tip-splitting arrangement, such as if they wash each other’s hands. When tip splitting works, it can foster teamwork similar to tip pooling.
Even though tip splitting is informal, it still adheres to specific laws. Employers must pay their tipped workers the minimum cash and federal minimum wage to comply with the tip-splitting law. Employers cannot claim tip credits above $5.12 or exceed the tips the employee received. The employee must also be informed of the tip credit application.
The laws of the federal, state, and local governments are constantly changing. Clover App Market offers the Homebase application to help restaurant owners keep up with these laws. It allows you to complete your payroll and track changing regulations in one location. Homebase is available for free. See what you have been missing.
Splitting tips into two parts is possible.
You can split tips in three ways: based on the hours worked, a points-based system, or a percentage. Homebase can help Clover merchants seamlessly implement these systems. Let’s take a look at how each method works.
Divide tips according to the number of hours worked.
Divide the total tip amount by the total number of hours worked. Multiply the total by each server’s hours worked.
For example, suppose a group of employees made $900. Server #1 worked an 8-hour day. Server #3 worked for 7 hours, and server #2 worked a 5-hour shift. Total hours worked: 20. Divide $900 by the 20 hours to get $45 an hour in tip revenue. Multiply $45 by the number of hours each server worked. Server #1 receives $45 x 8 or $360. Server #2 receives $45 x 5 or $225. Server #3 gets $45 x 7 or $315. Add these three numbers to double-check the math: $360 + 225 + 315 = 900.
Splitting tips with the point system
It is possible to use the points system to distribute tips fairly amongst all employees. This system gives different employees a specific number of points.
Say your servers received 10 points, and your bartenders, bussers, and servers each got 5 points. Assume you have three servers, one bartender, and one busser working a single shift. If this team earned $1200 over a change together, the points system would distribute the tips the following way: The three servers would receive 30 points, while the bartender and busser each received 5 points. The total points are 40. Divide the $1200 in tips by 40 to find the value of each issue.
Multiply the value of each employee’s points. Each of the three servers will receive $30 x 30 or $900 in this example. They would then divide the money evenly among themselves so that they all earn $300. The bartender receives $30 x 5, $150, and the busser gets $30×5, or $150. Add up all the payouts, and you should get $1,200.
How to divide tips by percentage
Let’s finally consider tipping based on a percentage. Tipping support staff according to a portion of tips earned is possible. The bartender is usually given 10% of the recommendations; the rest are split 25-30%.
Consider the example of a “to-go” crew. Imagine that a driver who delivers $1,000 per shift earned $180 as tips. The rest of the staff will do the following. The cook will receive 10% or $18. The person who takes the orders will receive 6% or $10.80. Order preparers would receive $13.40 or 13%. The busser will receive 6% or $10.80. The driver of the delivery vehicle would receive 65%, or $117.