Illegal Tip Sharing

Many restaurants and other institutions that involve food and tips have tip sharing or tip pooling policies that are designed to compensate the busboys, hosts and hostesses, and other individuals in the restaurant for their hard work. While this policy, on the whole, is fair to those who do not earn tips, they are frequently unfair to the servers who earn the tips and can also be illegal.

Texas' employment laws provide for both “tip pooling” and “tipping out” for employees who are tipped and not tipped. An employee that is “tipped” is expected to make at least $2.13 per hour plus tips. If the total amount in tips plus base wage does not add up to the official minimum wage amount, for all hours worked, the employer is required to make up the balance out of pocket.

It is interesting to note that when “minimum wage” is set, that is the very lowest number that a person can make. Part of the appeal of tip-based jobs is that one can make much more than the base and the minimum wage in tips. Tip sharing and tip pooling cut into a person's ability to maximize on the benefits of working in a service industry.

Texas, unlike other states, has no specific laws regarding tip sharing and instead refers to the Fair Labor Standards Act. The FLSA has a provision that says that employees have the right to keep all of their tips except those tips that go into a valid tip pooling or sharing arrangement. The Fair Labor Standards Act also says that tip pooling is allowed as long as no employee has his or her tips reduced by more than 15%. Determining if a tip pooling or tip sharing program is valid or invalid is a completely different story.

Contact a Houston Employment Attorney

If you think you may have been a victim of an illegal tip sharing program, contact the Houston employment attorneys of the Ross Law Group at 713-482-6910.