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Why do employers use tip pools?

On Behalf of | Jul 1, 2022 | Entrepreneurial Law |

Employees who work in tipped professions are sometimes put into tipped pools by their employers. This essentially just means that the employee who gets the tips does not get to keep them. All of the tips are compiled into a single pool and then split up among all of the staff who are eligible.

You’re starting a business, and you can certainly understand why an employee who earned less in tips would want to be in a pool with an employee who earned more. You also know that it is legal to use tip pools in Massachusetts, as long as only eligible employees are included. But why would you want to do this as an employer?

It helps include everyone

The biggest reason, in some cases, is that it helps to include all of the staff. Because of the duties they have to perform, some staff members may naturally get far fewer tips than others. Someone who clears tables isn’t going to make the same in tips as a waiter or a waitress, for instance. A tip pool evens that out and helps to support all of your workers.

It may provide better service

Another reason is that the service that customers get may be slightly better with tip pooling. Any member of the waitstaff who sees that a customer needs something, regardless of the section or the table, can you quickly go help out. They know that they’re still going to be compensated for it when the tips are divided and they get a portion from that table.

Tip pools are allowed, but it is important that employers use them the right way. As you get your business set up, consider what will be best for your employees, what the law requires and how to put a system in place that is legal and fair.