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Thread: Managers Taking Tips

  1. #1
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    Default Managers Taking Tips

    I was curious to see if i can find some help on tip pooling. Is it legal or illegal for a manager on salary to take tips from the tip jar? I have one that thinks she should recieve the tips too and divides the tips 4 ways instead of 3 for the 2 bartenders and waitress. Can anybody give me some help on this issue?

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    This is not my area of expertise, but I just so happened to see a case posted in an employment law newsletter that may have some indirect bearing. This was a CA case involving Starbucks, and the CA Court of Appeals ruled that it was not illegal for Starbucks to require pooled tips to be shared among the baristas (servers) and shift supervisors.

    The article cited the court's reasoning, relying on previous cases where "Later cases held so long as the tip-receiving employee was not required to share his or her tips with the employer or manager, such policies were acceptable, even if the employees the tip would be shared with, did not provide direct service, such as
    bartenders and dishwashers."

    Now that's CA, so wherever you are may be different.
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    It does get complicated. Prior to the court decision just cited, the obvious cite would be from federal DOL, which seems to say something different. This implies (as suggested) the situation is now a function of which juristiction one is in.

    http://www.dol.gov/esa/whd/regs/compliance/whdfs15.htm

    Tip Pooling: 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, such as waiters, waitresses, bellhops, counter personnel (who serve customers), busboys/girls and service bartenders. Tipped employees may not be required to share their tips with employees who have not customarily and regularly participated in tip pooling arrangements, such as dishwashers, cooks, chefs, and janitors. Only those tips that are in excess of tips used for the tip credit may be taken for a pool. Tipped employees cannot be required to contribute a greater percentage of their tips than is customary and reasonable.
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    And since the OP did not indicate what state....................
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  5. #5

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    Just a quick note on that case as I'm in CA and this has come up pretty heavily at my work. The judgement that ruled in favor of tip-splitting with shift supervisors ONLY ruled based on job description. The part of the DLSE that refers to 'agents of the employer' was not touched on.

    Current thought by many is that the judgement will likely be reversed in future appeals.

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    Im in the Ga. I looked but could not find anything.

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    I wouldn't expect anything specific in Georgia law or even court cases. Georgia may arguably be the #1 (or second to Florida) state in the country with virtually zero wage and hour laws of their own.
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    IMO, Georgia, Alabama and Mississippi are a three way tie. Florida has a higher-than-Federal minimum wage, so they come in second.

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    Just Info...

    Tip Pools Restricted to Employees (Not Employer)
    Employers are also ineligible to participate in a tip pool. The FLSA’s definition of an “employer” “includes any person acting directly or indirectly in the interest of an employer in relation to an employee” (29 U.S.C. 203(m)). Courts generally use the “economic reality test” to determine whether an individual is an employer. This test inquires into whether the individual
    (1) has the power to hire and fire employees,
    (2) supervises and controls employee work schedules or conditions of employment,
    (3) determines the rate and method of employees’ pay, and
    (4) maintains employment records.

    The greater number of these factors present, the more likely it is that the individual will be deemed to be an agent of the employer and thus ineligible to participate in the tip pool (see, e.g., Chung v. New Silver Palace Restaurant, Inc., 246 F. Supp. 2d 220 (S.D.N.Y. 2002) (“black jackets” were employers, where they included shareholders and board members of the restaurant, exercised hiring and firing powers and had direct supervisory power over the waiters); Ayres v. Restaurant Corp., 12 F. Supp. 2d 305 (S.D.N.Y. 1998) (the general manager of the restaurant was ineligible to participate in the tip pool where he had authority to suspend, terminate and hire, had responsibility for the restaurant’s budget, and received a weekly salary irrespective of his hours worked)).
    Last edited by ArmyRetCW3; 07-09-2009 at 02:49 PM.
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    Quote Originally Posted by SoCalPayroll View Post
    Just a quick note on that case as I'm in CA and this has come up pretty heavily at my work. The judgement that ruled in favor of tip-splitting with shift supervisors ONLY ruled based on job description. The part of the DLSE that refers to 'agents of the employer' was not touched on.
    SoCal is correct. The ruling did not specifically cover managers since it was aimed at only shift supervisors, who in this case provide much of the same service as baristas, but the ruling seemed to imply if it had been managers the ruling would have gone the other way. But in this case managers meant people who had authority to hire, fire, make shift assignments, etc. and typically did not serve customers like baristas.

    So you cannot simply rely on a job title but must look at duties, not to mention GA is not CA. But the DOL cite by Army seems to imply much the same concept.
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