Q. I manage a restaurant and would like to pool the servers’ tips to enhance teamwork among the waitstaff, and ultimately provide a better service experience to our customers. Is it legal to include shift managers who run food? What about hosts?
A: Tip pooling is an area fraught with potential pitfalls for unwary employers so it is important to know the law and review your tip pooling practices in order to avoid potentially costly wage and hour lawsuits.
New Hampshire is more restrictive than federal and some state laws when it comes to tip pooling. Recent amendments to the tip pooling law create potential hazards for employers. In New Hampshire, tips are considered wages, are the property of the employee receiving the tip, and must be retained by the employee receiving the tip, unless the employee voluntarily, and without coercion from the employer, agrees to participate in a tip pooling or tip sharing arrangement. Employers may only assist in administering these valid tip pooling or tip sharing arrangements when requested by the employees. This may include suggesting reasonable and customary practices for tip pooling and mediating disputes between employees regarding the tip pool. The important thing to remember is that the employees must voluntarily agree to participate in the tip pooling arrangement and cannot be forced to do so by the employer, either directly or subtly.
New Hampshire’s recent amendments to the tip pooling law add new definitions for “tip pooling” and “tip sharing” that seem to address who may participate. Tip pooling is defined as the voluntary practice by which directly tipped employees “within the same job category” intermingle their tips and then redistribute them among participating employees. Tip sharing is the practice by which directly tipped employees give a portion of their tips to another worker “who participated in providing service to customers.”
While New Hampshire law on tip pooling generally focuses on the voluntariness of the arrangement, these new definitions, as well as the law’s reference to employers administering “valid tip pooling or tip sharing” arrangements, suggest that the new law may restrict tip pooling to employees within the same job category, and tip sharing to workers who participated in providing service to customers. Until there is more clarity on this new law, employers would be wise to administer only those voluntary tip pooling or tip sharing arrangements involving employees within the same job category or employees who participated in providing service to customers (and, of course, only when requested to do so by the employees).
John Kennedy can be reached at email@example.com.
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