Court: Tipping pools are for servers only

Tip pools are strictly for the serving staff.

That's the ruling of the US Ninth Circuit Court of Appeals, recently. The three-judge panel voted 2-1 in favor of upholding Department of Labor regulations that limit tip pools to front of house staff only.

Tip pools are often used to help balance the wage gap between front and back of house staff. The lawsuit was spurred by workers in Las Vegas who said management "was taking their tips to share with other workers."

The ruling adds an extra level of complexity as restaurant operators try to juggle rising minimum wage costs, health benefits, and (in some cases) paid sick leave.

From a practical standpoint, changing the tip pool now to address this ruling will require a lot of administrative issues, changes to compensation structure, impact employee morale, and create other challenges. This is a big change, and you may end up changing back to your current model if the 9th Circuit then changes its ruling, if a request for review is made and granted.
— Paul Schlienz, Communications Manager, Washington Restaurant Association

We're also seeing more and more restaurants ban tipping from their establishments and, instead, adopting "labor surcharges" that can be shared among all employees. Some restaurants are doing it in order to give their servers a fair, livable wage while others are hoping to balance the wage gap between front of house and back of house employees.

Instead of the surcharge or tipping, other restaurants are raising prices on their menu. Meanwhile Alimento (an LA-based restaurant) is adding an additional tipping line to receipts that allow customers to tip the kitchen staff as well as their server.

Restaurants affected by the ruling are those in states that don’t allow a tip credit and fall within the Ninth Circuit, which includes California, Washington, Oregon, Alaska, Nevada, and Montana.

The Washington Restaurant Association is planning on appealing the ruling, so things could chance once more.

Tip jar photo by David Dugdale.