Tipping During The Pandemic

The pandemic and government closures continue to force in-dining restaurants to pivot to take-out and delivery. Instead of managers supervising and servers waiting on tables, they work in teams with cross-trained duties. But, restrictions aimed to prevent tip theft make playing as a team more difficult.

Legal Ownership Of A Tip

The act of a customer leaving a tip is a transaction between the customer and the worker, not the restaurant.

The entire tip belongs to whom it is left, meaning that if a customer leaves a tip for a particular worker, the tip is the property of that person. It doesn’t matter if the worker is a server, host, or manager, as long as the tip is left for them.

Tip Pooling Is Allowed With Limits

Many restaurants have voluntary or mandatory sharing of tips among co-workers. This is often referred to as a tip sharing or a tip pool. Essentially, tips are pooled together on a nightly or weekly basis and shared among a certain workers, based on a formula. Tip pools can be either voluntary or mandatory.

Workers may voluntarily share tips with co-workers who do not get tips from customers. Indeed, many servers (who get tips) share with bussers, hosts, and other restaurant employees.

Restaurants may force workers to share tips, subject to federal and state restrictions. Among other things, mandatory tip pooling has legal limits on who contributes and receives tips from the pool:

• The House Gets Nothing. The restaurant itself may not keep any of the tips left by customers.
• No Manager Or Supervisor Sharing. Managers or supervisors may not receive tips from a mandatory tip sharing pool; if they do, the other workers sharing in the pool may claim tip theft. Generally, the only way a manager ever gets to keep a tip is if a customer leaves it to them.

Excluding Managers And Supervisors From Tip Pools

The rules seem simple: the tip belongs to whom it is left; workers may voluntarily share tips; and, restaurants may require sharing of tips as long as they don’t keep any and managers are excluded. How this plays out when a customer tips on a take-out or delivery order often isn’t simple.

• No Switching Back And Forth. Whether a worker is a manager is not a shift-by-shift question. Once a manager, always a manager, unless the worker is demoted. This means that a worker who supervises (or in California, merely “directs”) a larger team cannot share in any tips, even when working a different shift in non-manager role.
• The Actual Job Duties Matter, Not The Title. The reality and actual job duties, and not just the job title, determines who is a manager. In theory, figuring out who is a manager is straightforward. In practice, the lines are blurred, especially with the delivery/take-out model.
• Federal And State Law Differ. Federal law defines manager in terms of discretion to hire, fire, and discipline. Generally, if paid a salary the worker is a manager who cannot share in the tip pool, meaning that an hourly assistant manager or shift lead could share in tips, though. The result is different in California, where anyone who has “authority to hire, discharge, supervise, direct, or control” cannot share in tips. So, even though federal law allows it, California prohibits an hourly worker who merely directs other employees from sharing in a mandatory tip pool.

A tip left to a take-out/delivery fulfillment team of workers that includes managers and non-managers may be shared, but not with the manager, even though they are doing almost the same work as their teammates. In states like California that define manager narrowly, this means that even hourly managers are barred from receiving tips. In the infrequent case a tip is left to a manager, the manager keeps it all, unless the manager decides to share it, but the restaurant cannot force the manager to share it. While managers make more than the hourly workers they supervise, the wage gap is often small, exacerbating the fact that they cannot supplement with tips from a mandatory tip pool.

When operating during a pandemic, how to share tips among co-workers is unfortunately one of many areas in which logic and the law conflict.