Tip pooling laws in Pennsylvania

On Behalf of | Jun 24, 2018 | Firm News |

While many Pennsylvania employers want to use tip pooling with employees — a practice that involves taking everyone’s tips and distributing them evenly amongst everyone — it can be against the law if not done correctly. In addition, the practice of tip pooling may change very soon in the state due to efforts from the Pennsylvania Restaurant & Lodging Association to expand tips to everyone who works at a restaurant as long as everyone makes at least minimum wage.

For employers considering tip pooling, it is critical to be aware of what the current law is. However, the information below barely scratches the surface of what you may need to know, which is why it should not be relied upon as legal advice — and why you should always contact an attorney should you have any questions.

What is a tip?

There are laws in place that impact what constitutes a tip. If a customer leaves behind cash over the amount of the bill, then the full amount is a tip to the employee. In the event a customer leaves a tip with a credit card, then the employer can take out a certain amount to pay for any credit card processing fees. Additionally, large parties may need to pay a mandatory service charge, but this charge is not a tip under Pennsylvania law.


What does tip pooling involve?


Some employers prefer to utilize the practice of tip pooling, which involves taking everyone’s tips and redistributing the money. For this practice to be legal under the new law, every employee must make at least minimum wage. And while the law states that supervisors and managers cannot receive a portion of the tip pool, other not-traditionally tipped employees can, including cooks.

As mentioned above, however, the law on tip pooling can be very complex, which is why you should know all the details before implementing the practice in your business.