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Law dictates who can share in tip pool

Q. I work at a restaurant full time, and most of what I earn is based on tips. We have always kept our own tips, but the new manager decided that we are now going to pool tips. No one on the wait staff is happy about it, and we are now making less than we used to. I’m not saying he is skimming, but I want control of the money people leave me. What can we do about this?

A. How organizations deal with tips has been a matter of much controversy over the last few years. To get accurate information, I consulted with Daniel Field, an employment attorney at Morgan, Brown & Joy LLP in Boston, who explained: “Unless the restaurant is skimming or distributing tips improperly, the new tip pooling policy at this restaurant is probably lawful.”

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Massachusetts and federal law allow employers to mandate that restaurant employees participate in a tip pool; this is often done to ensure all employees who serve customers receive a fair share of the tip. The Massachusetts Tip Law forbids an employer from requiring any wait staff employee to participate in a tip pool where tips are distributed to anyone other than wait staff or service bartenders.

The federal minimum wage law (Fair Labor Standards Act) further prohibits tip sharing with employees who do not customarily and regularly receive tips, such as kitchen and administrative staff.

According to the Massachusetts attorney general’s fair ­labor division, which enforces the law and where Field formerly served as chief, “Workers with limited managerial responsibility, such as shift supervisors, assistant managers, banquet captains, and many maître d’s may not participate in tip pools.” A federal appellate court recently ruled that this means that employees, such as servers in coffee shops who act as shift supervisors and who have only “exceedingly slight” supervisory duties, may not participate in tip pools.

There are significant penalties when a tip pool is administered incorrectly. Even inadvertent mistakes by restaurants can have serious consequences, and can permit employees to recover from their employer three times the amount of their lost tips, plus attorney’s fees. Many local restaurants, resorts, and coffee shops have faced multimillion-dollar judgments after erroneously including ­supervisory, administrative, or kitchen staff in a tip pool.

The law is controversial and some employers have responded by forbidding tipping altogether, while others have cut lower-level supervisors out of tip pools, as seems to be mandated by the law.

Elaine Varelas is managing partner at Keystone Partners, a career management firm in Boston, and serves on the board of Career Partners International.
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