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Tip sharing is a thorn in some workers' sides

Some employees in the restaurant industry count on tips to survive. There are some new developments in how tips in the restaurant industry are handled that all employees should know.

Earlier this year, the National Restaurant Association (NRA) petitioned the United States Supreme Court to hear a case regarding tip pooling. This is a fairly common practice in the restaurant industry, but it is sometimes misused and often comes across as a thorn in the side of the workers.

What is tip pooling?

Tip pooling occurs when workers who receive tips in the service industry have to put those tips together with other people who receive tips. The tips are then distributed to employees in a predetermined manner. In some cases, employees who are non-tipped, such as dishwashers or cooks, receive part of the money in the tip pool And, this is the issue at the center of the NRA's petition.

What is considered a tip?

A tip is any money or compensation given to a worker in exchange for the service received. Typically, restaurant guests will give a server money via cash, credit card or check at the end of a meal as a way to thanking the server for taking care of them. This money, which is provided in addition to the cost of the meal, is a tip.

Why are tips important?

Many servers and other tipped employees make an hourly wage that is less than minimum wage. The tips they earn should make up the difference between their hourly pay and the current minimum wage. For example, a New York City restaurant with at least 11 employees has a minimum wage of $11.00 per hour. For tipped employees, the hourly minimum wage is set at a $7.50 cash wage with a $3.50 tip credit. This means that the server makes less per hour on his or her paycheck than a non-tipped employee.

Why is tip pooling controversial?

The issue with tip pooling is that some employers are using the tip pools to distribute money to employees who are traditionally non-tipped, such as back-of-house staff, cashiers or hostesses. This, theoretically, means that servers make less money per hour than what they actually earned, but they have to live with it as long as they are making a total of $11 per hour. At the same time, the employer might be sneaking by paying the traditionally non-tipped staff less than minimum wage and making up the difference with the tip pool.

Restaurant workers who feel that they are being subjected to tip pooling in an incorrect or illegal manner might decide to take action. Learning about your rights is crucial since you don't want to work hard for money that is being yanked away from you.

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