What Should Employees Know about Tip Pooling Laws in New York’s Hospitality Industry?

If you work in New York’s hospitality industry, you probably rely on tips to make a living. Whether you’re a server, bartender, barback, or busser, understanding tip pooling laws is essential. Tip pooling can affect how much money you take home. It can also raise legal questions if your employer does not handle it properly.

Here’s what you need to know about tip pooling in New York.

What Is Tip Pooling?

Tip pooling means employees who receive tips put them into a shared pool. At the end of a shift, the employer divides the tips among a group of eligible employees. The goal is to reward all workers who contribute to customer service, not just those who deal directly with customers.

Tip pooling is legal in New York, but employers must follow specific rules.

Who Can Participate in a Tip Pool?

Only certain employees can take part in a tip pool. In general, tipped workers who provide direct customer service are eligible. This includes:

Servers
Bartenders
Bussers
Barbacks
Hosts (in some cases)

Managers and supervisors are not allowed to take a share of the tip pool. Even if they help on the floor, they can’t receive tips if they have authority over other employees.

Back-of-house staff, like dishwashers, cooks, and janitors, are also not eligible. They don’t directly serve customers and cannot legally receive tips from a tip pool.

Tip Credit and Minimum Wage

New York allows employers to use a “tip credit” toward meeting the minimum wage. This means they can pay tipped employees less than the standard minimum wage, as long as their tips make up the difference.

However, for the tip credit to apply, the tip pool must follow the law. If ineligible employees are included in the pool, your employer may lose the right to claim the tip credit. In that case, they would owe you the full minimum wage.

Employers must also give you written notice if they plan to take a tip credit. If they don’t, they may owe you back pay.

Can Employers Take a Cut?

No. Employers are not allowed to take any portion of the tips for themselves. This includes business owners, managers, and supervisors. They also can’t use tips to pay for business expenses, like credit card fees or uniforms.

If your employer keeps any part of your tips or forces you to share with ineligible employees, that may violate New York labor law.

What Should You Do If Something Feels Off?

If you notice tip pool irregularities, start by documenting what’s happening. Keep track of your hours, who is in the pool, and how tips are divided. Ask questions if you’re unsure whether the tip pool is being handled correctly.

You don’t have to accept unfair treatment. You have rights under New York and federal law.

Know Your Rights, Protect Your Pay

Tip pooling can be fair when done correctly, but it’s easy for employers to get it wrong, intentionally or not. If you suspect your employer is violating tip pooling laws, speak up. You may be entitled to lost wages or other compensation.

At Borrelli & Associates, P.L.L.C., we help workers understand and protect their rights. Our team has experience with wage and hour violations, including tip pooling issues. We’re here to help if you have questions or concerns.