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Running Your Business:
Tip Pooling: Are You Doing It Right?
By Michael Mitchell - Fisher & Phillips

It's common for restaurants to require tipped employees to contribute a portion of their tips into a pool which is then split among other employees. This is perfectly valid under the federal Fair Labor Standards Act's tip-credit provisions, but only if you follow certain limitations such as how much is contributed and who all will share in the pool. That's the issue facing The Grotto in Houston, where several disgruntled ex-waiters have filed a federal lawsuit claiming back pay under an improper tip pool arrangement. Beltran, et. al. v. Landry's Restaurants, Inc d/b/a/ The Grotto.

How Much Money Can Be Put In?

In the first place, tipped employees cannot be required to contribute more of their tips to a pool than is "customary and reasonable" in the locality in which they work.

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