tip jar

Court Ruling Holds Important Implications for Tip Pooling

Ruling bans restaurants from splitting pooled tips between servers and back of house employees

The latest in the struggle to find a compensation system that satisfies workers at all levels of the restaurant service industry is a court ruling in the U.S. Ninth Circuit Court of Appeals regarding tip pooling. A three-judge panel ruled two to one in favor of upholding U.S. Department of Labor regulations limiting tip pools to front of house workers who customarily receive tips, according to Restaurant Hospitality.

This means that kitchen staff and other back of house workers are no longer able to receive a portion of tip pools, which presents an issue for restaurant operators who rely on tip sharing to help bridge the wage gap between front and back of house workers. Restaurants affected by the ruling are those in states that don’t allow a tip credit and fall within the Ninth Circuit, which includes California, Washington, Oregon, Alaska, Nevada, and Montana.

Paul Schlienz, communications manager for the Seattle-based Washington Restaurant Association, writes to members, “From a practical standpoint, changing the tip pool now to address this ruling will require a lot of administrative issues, changes to compensation structure, impact employee morale, and create other challenges. This is a big change, and you may end up changing back to your current model if the 9th Circuit then changes its ruling, if a request for review is made and granted.”

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