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Understanding your rights under tip pooling

If you work in a restaurant, coffeehouse, bakery or deli, your employer might require that everyone pool their tips. In many places where people are served one at a time at a counter, like in a Starbucks or sandwich shop, there may be a big jar on the counter where customers can place tips just as a thanks for the overall service.

Employers can determine how the tips are divided. They might divide them at the end of each shift, for example, or perhaps once a week, with those who worked the most hours getting the larger share. Tip distribution may be done based on people's jobs. For example, servers may get a larger percent of the pooled tips than bussers and other employees who have less interaction with customers.

Tip pooling (sometimes called tip sharing) is legal under federal and state law. However, there are some restrictions. For example, under federal law:

  • Employees must be informed about the business' tip pooling/sharing policy and how tips are distributed.
  • Employees have to earn at least the state's minimum wage between their hourly pay and their tips.
  • Managers and business owners can't take any portion of the tips.

There are further restrictions under New Jersey law. For example, employees who receive individual tips are only required to contribute a reasonable amount to the pool.

If you believe that your employer is not handling tips as state and federal law requires, you can talk with them, but it's good to know what the law says first. It's possible that they aren't as knowledgeable of the law as they should be or are misunderstanding it.

If it continues to be a problem, and you believe that you (and perhaps others) have been intentionally shortchanged a significant amount of tip money, it may be wise to talk with an attorney to determine what your options are.

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