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Laws Regarding Tip Pooling over All Shifts and Multiple Sites Indiana

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  • Laws Regarding Tip Pooling over All Shifts and Multiple Sites Indiana

    Thank you for viewing and for any input you may have. First I'll need to provide background. I apologize for the length, but I feel it is necessary

    I work at a Valet at the Indianapolis Airport that’s operated from the parking garage. Most Valets here are paid 7/hr plus tips. I've worked here for almost 5 years, and the tips have always been split between the employees on the shift. Cash tips are split at the end of the shift, and Credit Card tips are split up on paper and added on the employee's check. First shift makes very minimal tips, but has a high volume of customers. Second shift makes a very significant amount of money in tips (sometimes over 100$ each in credit card tips) and has the highest volume of customers, and Third shift is usually somewhere in between.

    The Airport recently decided they wanted to open a new Valet location on Curbside, and my company jumped all over it, for the fear of having a competitor in close proximity. The new site generates MINIMAL business. Some of those valets are lucky to have ANY gratuity for an entire week due to the lack of business. I’m sure this generated quite a few complaints, as the employees were promised gratuity.

    My supervisors recently decided to enact a policy that would require that we pool ALL credit card tips from both sites and disperse them to the employees based on how much tips both sites earned and how many hours each employee worked. They feel this would solve the problem of 1st shift making very little in tips, and give the Valets at Curbside the opportunity to make tip money by making them rotate between sites.

    Every single valet that works at Express Valet that I know of (Including the ones that would benefit financially) does NOT like this new tipping arrangement. Employees on 2nd shift would be making up to 500$ LESS per paycheck and required to do the same amount of work.

    The statement of purpose in the memo was "In order to more accurately reflect and reward work done by all valets, the tipping policy will soon change". The problem with this arrangement is that Valets on very, VERY slow shifts will make the same on their check as valets on very busy shifts.

    I agreed that 1st shift has been getting the short end of the stick for a while. They check in sometimes over 100 cars and have little to nothing to show for it. In the spirit of the statement of purpose, I proposed a Volume based system, where the Tips were split between valets according to the volume of cars that they assisted. That way, 1st shift would be more accurately compensated and rewarded for their work, 2nd shift wouldn’t suffer such a dramatic pay cut, and valets on slow shifts wouldn't earn the same as those on busy shifts.

    My idea was declined. The managers argued that it would be too much administrative work to accommodate that policy.

    My question would be... Is this legal? Can an employer legally FORCE tip pooling with other shifts and (arguably other SITES) WITHOUT even a single employee consent? (Granted the supervisor said he wanted to treat both locations as one site, yet they have different employees, price rates, uniforms, etc.) The whole thing just sounded very fishy to me. Not to mention, I am one of the second shift employees, and my pay would be greatly reduced.

    It is also worth mentioning that this company doesn’t have a reputation for being very ethical. In fact, in the 5 years I have worked here, I have not been provided a single 15 minute break or a lunch break. For breaks we really just have to hope for a slow period. If a customer shows up while we are trying to have lunch, our “lunch break” is over.

    Thank you for any input or suggested reading material.

  • #2
    Your starting point is the following. Read the entire factsheet, but look at anything discussing "tip pools". The problem is that what you describe is not illegal based on the general rules, so you really need to find specific court or administrative rulings addressing your very specific issues. I took a quick look in my FLSA law book and I am not seeing anything directly on point. There is a "guideline" of 15% being the suggested maximum amount of tips being lost in the pool, but that is not a hard rule. You might try talking to federal DOL.

    Tip Pooling: As noted above, the requirement that an employee must retain all tips does not preclude a valid tip pooling or sharing arrangement among employees who customarily and regularly receive tips. The FLSA does not impose a maximum contribution amount or percentage on valid mandatory tip pools. The employer, however, must notify tipped employees of any required tip pool contribution amount, may only take a tip credit for the amount of tips each tipped employee ultimately receives, and may not retain any of the employees' tips for any other purpose.
    The 15% rule can be found in DOL FOH 30d04(b), and DOL opinion letter dates 09/05/1978.

    As far as I can tell, IN follows the federal tip rules as is.
    "Reality is that which, when you stop believing in it, doesn't go away".
    Philip K. **** (1928-1982)


    • #3
      FYI, nowhere in the US (with the exception of certain hotel workers in Illinois) does the law require the adult employees of private employers to have a 15 minute break. A small handful of states require a ten minute break morning and afternoon but Indiana is not one of those states. Approximately half the states require a meal break but again, Indiana is not one of them. Federal law has regulations that must be followed IF breaks are offered, but does not require any breaks at all.

      While I personally believe that all employees should be granted periodic breaks, it is not required by law and the employer is not violating any laws by not providing them.
      The above answer, whatever it is, assumes that no legally binding and enforceable contract or CBA says otherwise. If it does, then the terms of the contract or CBA apply.


      • #4

        Q: Are employers required to provide breaks to employees?
        A: Indiana state law does not generally require employers to provide rest breaks, meal breaks, or breaks for other purposes to adult employees. Minor employees (under 18 years of age) who work six or more hours in a shift must be given one or two breaks totaling at least 30 minutes. These breaks may be taken at any point during the minor's shift. Indiana Administrative Code 610 IAC 10-3-1 requires break logs to be maintained by the employer to document all breaks provided to minor employees.

        Certain other categories of workers, such as airline pilots, truck drivers, and workers covered by a union collective bargaining agreement may be entitled to mandatory breaks under other applicable regulations or by contract. Check with the appropriate regulatory agency or with your union representative.
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