Tip Pooling Distribution Restrictions Upheld by Ninth Circuit

Photo by: Seemi Peltoniemi

Photo by: Seemi Peltoniemi

Tip pooling is a common practice in the restaurant industry but the legal back and forth of how much and to whom the pooled tips could be distributed has lead to much confusion within the food services industry.

Restaurants May Not Require Wait Staff to Share Pooled Tips With Back of House Staff
Last month, in the case of Oregon Restaurant and Lodging Association et al. v. Perez et al., the Ninth Circuit upheld the Department of Labor’s rule barring employers from collecting tips given to waiters or other service employees and distributing to back of house staff not in the chain of service (i.e. cooks and dishwashers).
Since California is within the Ninth Circuit’s jurisdiction, the Court’s decision in this case will lead to increased litigation against restaurants for unpaid wages.  Highly successful restaurants have closed their doors as a result of these wage and hour claims.
Enterprises with tip pooling practices should have a written tip pooling policy that specifically outlines how tips are pooled and shared. Such written policies should clearly state that pooled tips will not be shared with owners, managers, supervisors, or anyone outside of the chain of service such as chefs and dishwashers.
Contact me at (949) 529-0007 if you need assistance reviewing and revising your employment policies and practices to ensure compliance with California and Federal laws.

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In: Employment Law, New Laws

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