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Is tip sharing legal in New York?

Many residents of New York City and the state of New York may start their professional careers working as servers in restaurants. For some it's a part-time job to pay the bills during college. For others, it's a career decision by someone who wants to manage or own a restaurant later in life.

Regardless of why you're working in the restaurant industry, you're probably working hard every day you have a shift. If your employer requires pooling of tips, you have questions regarding the legality of the practice. Depending on what happens when the tips are pooled and who receives a portion of the pooled tips, the practice may or may not be illegal.

The legal form of tip pooling

In general, most employers who require that server staff pool their tips do so for one of two reasons. The most common is to ensure that those who perform critical services, like host staff and bussers, receive a portion of the tips earned by the wait staff on any given night. This practice is called tip sharing. It can incentivize these typically non-tipped employees to try even harder.

Alternately, some employees require wait staff to pool their tips and split them evenly among all the servers on the shift, ensuring that no one is shorted due to receiving poor tippers or small parties during any particular shift. When practiced in this form, tip pooling is legal legal, provided the tipped wait staff are earning at least minimum wage for each hour worked.

When tip pooling becomes illegal

Tip pooling as a practice becomes illegal when the owner or manager begins taking a cut of the pooled tips. It is also illegal for employers to use tip pooling as a means to avoid paying their employees minimum wage. If pooled tips, combined with standard service hourly minimums, do not match the state minimum wage for tipped employees, employers are required to make up the difference. Unfortunately, tipping is an area where enforcement can be difficult and complicated, and some unscrupulous employers or managers may try to take advantage of their tipped staff.

Talk with an attorney to determine if your employer is breaking tipping law

It is not against the law for employers to charge wait staff a fee for tips that are left on credit cards. The charge must be pro-rated based on the percentage of the charge that was tip and the actual fees incurred by the restaurant accepting the credit card.

However, it is illegal for them to pass on additional fees or withhold credit card tips for more than one business day. If you believe your employer is breaking the law, speak with an experienced workplace law attorney to determine what, if any, legal recourse is available to you and other staff at your place of employment.

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