Since it was reported that Doc Crow’s is being sued by a pair of former servers claiming the restaurant forced servers to fund a general tip pool, I’ve talked to several restaurant operators about that specific practice.
All said tip pooling is rarely a problem since 99.9 percent of servers willingly share tips with coworkers who help them.
Where it becomes a sticky wicket is when a server won’t share.
If he points to the law, which says his boss cannot force him to share tips, he’s standing on solid legal ground.
But in the few cases I’ve seen and in the many others I’ve read about, that ground becomes a slippery slope because the server soon suffers for that choice (I address this later).
That this rarely discussed restaurant practice has become a public water cooler topic has amazed many in the business since, well, it’s been done this way forever and usually without problem.
But in speaking to people who aren’t restaurant employees or veterans, it’s clear most don’t know the facts about how it works. And that’s made it easy for them to jump to conclusions about whether servers and/or restaurant owners are treating each other badly.
A few facts:
1. Tip pooling has been practiced industry-wide for decades, but as far as I know, it’s never been legal to force anyone to cooperate with it. Why not? Because to some extent, the law views servers as independent salespeople entitled to a sales commission.
Problems arise in the battle over whether they should share those commissions with support staff (food runners and table bussers). Some argue support staff should be paid a flat rate, while others believe they’ll give better service to customers and servers when they have some skin in the game. (My own experience as a busser makes me a fan of the second scenario.)
2. Typically tips are “pooled” by one person, usually an owner or manager who expects servers to share a predetermined percentage of their overall sales that likely was collected in tips.
Commonly, that shared amount is about 5 percent of one’s sales. So if a server sells $500 in goods and averages 15 percent in tips, she grosses $75, pays $25 into the tip pool and walks with $50. Tip pools are typically divvied up between bartenders, food runners and bussers.
In other cases, a server will keep about 60 percent of his gross tips, share 30 percent with his assistants and give 10 percent to the bartender. Using the same $500 sales example, the server keeps $45, gives $23.50 to his assistants and pays $7.50 to the bartender.
If a server complains about tipping the predetermined amount because he had a bad day in tips, a manager might let it slide—once. But if that server starts having lots of bad days, the manager knows that person is lying or giving lousy service.
(For what it’s worth, I had only two bad days in the 1.5 years I waited tables. By that, I mean I averaged 13 percent of tips on sales in 1990-‘91, when my normal average was 17 percent. My experience may differ from others, but “bad days” in terms of tips don’t happen that often, it’s usually just a bad table or two.)
3. The law says servers can’t be forced to share their tips, but 99.9 percent of the time, servers do share because they know it’s the right thing to do. They know someone else is handling their food and clearing their tables, so most are happy to reward the team.
But not everyone plays along. I worked with one server who routinely refused to contribute to the pool or paid in less than her peers. Whether she knew she wasn’t bound by law to contribute, I don’t know, but her actions instantly branded her a shrew. No shocker that she eventually quit, saying no one there was nice to her.
4. If a server objects to pooling or sharing, the operator can do nothing about it. Tradition be damned, the law is on the server’s side; they can’t be fired or disciplined for not contributing to the pool.
Can a manager give that server a crappy schedule and fewer tables because they don’t cooperate? I’ve seen that sort of retribution happen, and the server always quit. Whether that’s legal behavior by a manager is another story.
But like I said, most of the time it works out. In all the years I was in the business, I can’t recall even three times I saw a server refuse to support the pool.
In the days where credit cards were few and restaurants weren’t computerized, I saw plenty of servers try to go cheap on tipping out. But since that often meant they’d feel the wrath of a shrewd owner or manager who encouraged them to dig a little deeper for their teammates, it didn’t happen often.
5. Operators can, but don’t often abuse the the tip-pooling system. They can take cash from the tip pool to subsidize kitchen staff wages. But since those tips never get claimed as income, that’s a big no-no for the IRS, and it’s easy to spot in a detailed audit.
Operators are occasionally accused of skimming from the tip pool for themselves. And while that’s likely happened, it’s increasingly challenging to do today because credit card transactions outnumber cash transactions by a large margin, which means there’s a clearly blazed paper trail.
In well-run restaurants, when a server checks out at the end of a shift, what they sold is recorded, what they claim as tips is recorded, and what they contribute to the tip pool is recorded . If there’s ever any question from the IRS, the paper trail tells the story.
That this issue has erupted into a brouhaha (since a server at Lynn’s Paradise Café was fired for a similar issue) surprises me. I never imagined non-restaurant people thought all that much about the nuts and bolts of the business—well, at least until they thought a bolt was being used to screw someone.
Whether that’s happened at Doc Crow’s, I don’t know. Given that the operating partners have run successful restaurants here for many years without running afoul of the law, I have my doubts.
One restaurant operator I spoke to believes problems like this lawsuit could lead to the gratuity system being abolished. Why? Because no operator wants the headache or risk of not handling a tip pool correctly.
If tips are eliminated, servers have to receive a flat hourly rate, and that comes out of restaurateurs’ pockets.
And then from yours. While customers might rejoice over the elimination of gratuities, they’ll ultimately pay more through higher menu prices.
That’s a fate that could be avoided if operators and servers would just play nice.