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.

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Steve Coomes
Steve Coomes is a restaurant veteran turned award-winning food, spirits and travel writer. In his 24-year career, he has edited and written for multiple national trade and consumer publications including Nation's Restaurant News and Southern Living. He is a feature writer for Louisville magazine, Edible Louisville & The Bluegrass and Food & Dining Magazine. The author of two books, "Country Ham: A Southern Tradition of Hogs, Salt & Smoke," and the "Home Distiller's Guide to Spirits," he also serves as a ghostwriter for multiple clients.

29 thoughts on “Steve Coomes: Could tip pool lawsuits doom the restaurant gratuity system?

  1. A few thoughts, Steve.

    Why did you “talk to several restaurant operators about that specific practice,” but not a single server? I would argue that their voices matter.

    Secondly, you write “if a server objects to pooling or sharing, the operator can do nothing about it.” Then, amazingly, you go on to unapologetically itemize how operators can and do circumvent the law. I love how you say “most of the time it works out.” So said every slave plantation owner, ever. 🙂

  2. A few thoughts, Steve.

    Why did you “talk to several restaurant operators about that specific practice,” but not a single server? I would argue that their voices matter.

    Secondly, you write “if a server objects to pooling or sharing, the operator can do nothing about it.” Then, amazingly, you go on to unapologetically itemize how operators can and do circumvent the law. I love how you say “most of the time it works out.” So said every slave plantation owner, ever. 🙂

  3. This is the Occupy-Wall-Streeting of the restaurant business. Eventually the current entitled, narcissistic serving class will brow-beat enough Democratic lawmakers to pass a “living wage,” and the servers will find themselves wondering why patrons aren’t willing to pay $50 for a hotdog. It’s all a delicate balance, isn’t it?

  4. This is the Occupy-Wall-Streeting of the restaurant business. Eventually the current entitled, narcissistic serving class will brow-beat enough Democratic lawmakers to pass a “living wage,” and the servers will find themselves wondering why patrons aren’t willing to pay $50 for a hotdog. It’s all a delicate balance, isn’t it?

  5. If they receive a flat hourly rate that would make them an employee and subject to health care laws. This could further increase costs for the owner and have a greater impact on cost of goods and quality of service. Headed to Kroger now to stock up 😉

  6. If they receive a flat hourly rate that would make them an employee and subject to health care laws. This could further increase costs for the owner and have a greater impact on cost of goods and quality of service. Headed to Kroger now to stock up 😉

  7. Anyone that works in the restaurant biz is subject to any rules/wages the owner wants to employ (within some reason) or the owners feel like “I can always get someone else”. And they do. If servers stick together and start speaking up only then will things change. What’s sad is that no matter how good someone is they are always seen as expendable and most waiters work their a** off. I do empathize with independent operator’s struggle to maintain overhead & make a profit, but sometimes people are taken advantage of. Same happens in other small businesses too.

  8. Anyone that works in the restaurant biz is subject to any rules/wages the owner wants to employ (within some reason) or the owners feel like “I can always get someone else”. And they do. If servers stick together and start speaking up only then will things change. What’s sad is that no matter how good someone is they are always seen as expendable and most waiters work their a** off. I do empathize with independent operator’s struggle to maintain overhead & make a profit, but sometimes people are taken advantage of. Same happens in other small businesses too.

  9. I can understand encouraging tip pooling for bartenders, who would also generally be considered “tipped” employees. (As such, I assume they also fall under the rule that they can be paid less than minimum wage?) But … on the flip side, do bartenders share the tips they receive from people sitting at the bar, who often order food as well, and tip accordingly? But bussers and runners, best I can tell, are not classified as tipped employees, so they get minimum wage, right? Theoretically, they could end up making pretty much the same as the food servers, who have much more responsibility.

  10. I can understand encouraging tip pooling for bartenders, who would also generally be considered “tipped” employees. (As such, I assume they also fall under the rule that they can be paid less than minimum wage?) But … on the flip side, do bartenders share the tips they receive from people sitting at the bar, who often order food as well, and tip accordingly? But bussers and runners, best I can tell, are not classified as tipped employees, so they get minimum wage, right? Theoretically, they could end up making pretty much the same as the food servers, who have much more responsibility.

  11. Pingback: Could tip pool lawsuits doom the restaurant gratuity system? | Gratuity LLC
  12. Bussers and runners aren’t always tipped employees. It changes from restaurant to restaurant. When I bussed tables as a kid, I was a tipped employee. When I later waited tables, I contributed to a pool in which runners and bussers got a share. I’ve also seen situations where both positions are paid an hourly rate.
    I think we’ll eventually see the sub-minimum hourly wages paid tipped employees go away. But the backlash from that will be far higher food and drink prices for customers. In the end, someone always pays.

  13. Bussers and runners aren’t always tipped employees. It changes from restaurant to restaurant. When I bussed tables as a kid, I was a tipped employee. When I later waited tables, I contributed to a pool in which runners and bussers got a share. I’ve also seen situations where both positions are paid an hourly rate.
    I think we’ll eventually see the sub-minimum hourly wages paid tipped employees go away. But the backlash from that will be far higher food and drink prices for customers. In the end, someone always pays.

  14. Because servers aren’t the ones being sued here. Check the lede. Why didn’t I ask any servers? Because I was one, I dated them, befriended them and count many former ones among my circle of friends. I know how it goes in that job.
    Also high up in the story I mention people asking me how the whole system works. That’s what this piece is about, mostly, so I took the time to explain that.
    I added the bit about owners skimming because it added balance to the story. I can’t call out one party without pointing out the flaws of another.
    I’m glad you “love” how I say that it works out most of the time, because it does. Go ask some servers and owners.
    Your flair for the faux-dramatic, everyone-who’s-not-an-owner-is-a-victim posture is actually a flaw, Curtis, because you lose credibility every time you use such a tactic. America isn’t perfect, but it’s not Maggie’s Farm. When I got tired of waiting tables, I moved on to another job. Anyone who doesn’t like the work has the same choice. Slavery is forced labor; waiting tables isn’t.

  15. Because servers aren’t the ones being sued here. Check the lede. Why didn’t I ask any servers? Because I was one, I dated them, befriended them and count many former ones among my circle of friends. I know how it goes in that job.
    Also high up in the story I mention people asking me how the whole system works. That’s what this piece is about, mostly, so I took the time to explain that.
    I added the bit about owners skimming because it added balance to the story. I can’t call out one party without pointing out the flaws of another.
    I’m glad you “love” how I say that it works out most of the time, because it does. Go ask some servers and owners.
    Your flair for the faux-dramatic, everyone-who’s-not-an-owner-is-a-victim posture is actually a flaw, Curtis, because you lose credibility every time you use such a tactic. America isn’t perfect, but it’s not Maggie’s Farm. When I got tired of waiting tables, I moved on to another job. Anyone who doesn’t like the work has the same choice. Slavery is forced labor; waiting tables isn’t.

  16. I think you are actually missing one major part of the story here. What you are describing has gone on as long as I’ve been in the restaurant business (16 years) and most people get it and/or dont have a problem with it. However, it is now common for restaurants to “encourage” a pool in which all servers/bartenders tips are placed together at the end of a shift and divided equally, regardless of sales or ability, among servers/bartenders with a 50-70% share given to support staff. This allows management to avoid paying anyone in the front of the house more than $2.13/hr. Ultimately that leads to gross overstaffing thanks to essentially free labor from a management perspective. The server/bartenders are the ones who suffer financially. A stable restaurant environment is so hard to come by… What is one to do?

  17. I think you are actually missing one major part of the story here. What you are describing (tipping out) has gone on as long as I’ve been in the restaurant business (nearly two decades) and most people get it and/or don’t have a problem with it. However, it is now common for restaurants to “encourage” a tip POOL in which all server/bartender gratuities are placed together at the end of a shift and divided equally, regardless of sales or ability, among servers/bartenders with a 50-70% share given to each member of the support staff. Servers never receive their actual tips, only their portion, as deemed by management, days later. This allows operators to avoid paying anyone in the front of the house more than $2.13/hr. Ultimately that leads to gross overstaffing thanks to essentially free labor from a management perspective. The server/bartenders are the ones who suffer financially. The general manager mentality goes straight to “I only make x dollars per hours, thanks to salary and 70 hr weeks, why should servers expect to make more?” You are immediately considered a complainer and told to move on if you resist.
    A stable high-end restaurant environment is so hard to come by… What is one to do if he doesn’t agree with pooling but fears the repercussion of resisting?

  18. That’s not really much of a response. Either write an objective piece or make it clear you’re essentially writing an opinion piece. You got caught with your pants around your ankles on this one. Don’t be upset at this guy for calling you out.

  19. That’s not really much of a response. Either write an objective piece or make it clear you’re essentially writing an opinion piece. You got caught with your pants around your ankles on this one. Don’t be upset at this guy for calling you out.

  20. They’re already employees. Receiving an hourly rate won’t change that equation. It may, however, mean the workers could make more of a living wage. One way or the other, we pay as a society.

  21. They’re already employees. Receiving an hourly rate won’t change that equation. It may, however, mean the workers could make more of a living wage. One way or the other, we pay as a society.

  22. Pingback: Tip pooling works really well when all parties cooperate. | Food & Dining Magazine
  23. The words speak for themselves. You and Curtis have a better idea, pen a blog rather than taking potshots. Trust me, your way is easier. And speaking of being objective, about about using your real name?

  24. The words speak for themselves. You and Curtis have a better idea, pen a blog rather than taking potshots. Trust me, your way is easier. And speaking of being objective, about about using your real name?

  25. This article is so slanted toward forced tip pooling it makes me sick. No employee should be required to share what customers have voluntarily chosen to give them. End of story.

    Employees across this country are taking their employers to court over this outdated and corrupt practice. To suggest that employees don’t have a problem with such practices is deceiving and just plain dishonest.

  26. This article is so slanted toward forced tip pooling it makes me sick. No employee should be required to share what customers have voluntarily chosen to give them. End of story.

    Employees across this country are taking their employers to court over this outdated and corrupt practice. To suggest that employees don’t have a problem with such practices is deceiving and just plain dishonest.

  27. When would I, as a customer, tip a busser/runner? That was my point, they don’t get tips in the usual sense, although they may share the tips from the servers. I tip, my server. I think that is what the Labor Cabinet means when they allow the 2.13 rate for tipped employees.

  28. When would I, as a customer, tip a busser/runner? That was my point, they don’t get tips in the usual sense, although they may share the tips from the servers. I tip, my server. I think that is what the Labor Cabinet means when they allow the 2.13 rate for tipped employees.

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