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Tip Pooling, Server Banking, Wage Laws and Litigation

Christopher T. Vrountas, Esq.Nelson, Kinder, Mosseau & Saturley, P.C.

Employment Counseling and Litigation Group

Topics for Discussion

• What is “Tip Pooling”?

• What is “Server Banking”?

• What do the Wage Laws say about Tip Pooling and Server Banking?

Tip Pooling is?

• What is “tip pooling”? • Employees sharing their

tips earned to be redistributed among their co-workers.

• There are many different kinds of “tip pools”– Voluntary (management

not involved)– Required (management

involved)– Sharing only with servers– Sharing with non-servers

Tip Pooling/NH

• The New Hampshire wage act provides:

• Tips are wages and shall be the property of the employee receiving the tip and shall be retained by the employee, unless the employee voluntarily and without coercion agrees to participate in a tip pool which is not required and not controlled in any manner by the employer.

• If the employee agrees to participate, the employer is not precluded from administering a valid tip pool in which participation is voluntary, not coerced, and the employer exercises no control over the manner in which tips are pooled other than for accounting and bookkeeping purposes.

Tip Pooling/MA

• The Massachusetts Wage Act provides:– No employer or person shall cause, require or

permit any wait staff employee, service employee, or service bartender to participate in a tip pool through which such employee remits any wage, tip or service charge, or any portion thereof, for distribution to any person who is not a wait staff employee, service employer or service bartender. Mass. Gen. L. c. 149, section 152(c)

Tip Pooling/CA

• No employer or agent shall collect, take or receive any gratuity or a part thereof that is paid, given to or left for an employee by a patron, or deduct any amount of wages due an employee on account of a gratuity, or require the employee to credit the amount, of any part thereof, of a gratuity against as a part of the wages due the employee from the employer. Every gratuity is hereby declared to be the sole property of the employee or employees to whom it was paid, given or left for. Cal. Labor Code, section 351.

Tip Pooling Cases

• Starbucks• Ruth’s Chris Steak

House• Northeastern

University

Tip Pooling/Take Away

• Voluntary—means voluntary

• Don’t control it or impose terms (beyond bookkeeping)

• Document, document, document– To show consent– To keep accurate books

Server Banking is?

• Server brings in his or her own initial amount of cash to fund a personal bank during the work shift to make change when requested by customers, including when cashing out a customer paying a bill for the meal served.

• Employer funds a bank by advancing a cash amount to the server for him or her to use for change making manage until the end of the work shift when the server must return the advance.

• Server commingles his or her cash tips during a shift with the bank, either funded or unfunded, and makes change from the bank when asked by customers, including when cashing out a customer’s bill for a meal served.

Server Banking/NH Statute

RSA 275:48, provides in relevant part:

I. No employer may withhold or divert any portion of an employee’s wages unless:

(a) The employer is required or empowered to do so by state or federal law, including payroll taxes.

(b) The employer has a written authorization by the employee for deductions for a lawful purpose accruing to the benefit of the employee as provided in regulations issued by the commissioner.

Server Banking/NH Regulations

Lab 803.02(b) and (f) provide:• (b) Pursuant to RSA 275:48 I, no

employer shall require an employee or applicant for employment to pay for the cost of a medical examination, non-required drug or alcohol testing, records required by the employer, or any item required by and for the benefit of the employer, as a condition of employment. This shall not include examinations, permits or licenses required by state or federal law.

• (f) Pursuant to RSA 279:26-b and RSA 275:48, no employer shall withhold, divert, or make use of tips for any purpose not specifically allowed by RSA 275:48 I.

What is the effect of “making change”?

• Where is the Deduction? Payment of a cost? Withholding? Diversion? or use?

• What if it is not “from tips”?

• By the end of the shift, no money leaves the server’s hands.

• No “time value” for the money.

The DOL’s Response

• Fund the bank (but only once is necessary)

• Once funded, commingling irrelevant.

• Don’t ask the server to fund the bank (even if not from tips?)

The Presenter

• Christopher T. Vrountas leads the Employment Practice Group for Nelson, Kinder, Mosseau & Saturley, P.C. Mr. Vrountas represents companies in matters involving employment discrimination and wage claims, covenants not to compete, whistleblower claims, intellectual property matters, defamation claims, contract claims and other business disputes. He has appeared before various state and federal civil rights commissions nationally and has tried employment and commercial matters in both state and federal courts. He is a frequent speaker on employment law issues.