Tip Pool Rules for the Hospitality Industry in New York City
What are the laws on tip pools for the hospitality industry in New York?
The laws on tip pools for the hospitality industry in New York City are that the employer nor management is allowed to keep any portion of the tips and the distribution must follow specific rules.
Are Tip Pools arrangements Legal in New York City?
Tip pools are legal so long as they are done according to company policy AND only those who customarily and regularly receive tips. For example, if tips are shared with managerial employees, security personnel, or other non-tipped employees, this could result in a minimum wage violation.
The specifics of the Tip Pool Rules for the NYC Hospitality Industry
In New York, there are specific laws that regulate tip pools and the distribution of tips among employees in the hospitality industry.
According to New York Labor Law and the Fair Labor Standards Act, an employer is allowed to require that employees who regularly receive tips participate in a tip pool. However, the tip pool must be limited to employees who regularly receive tips and cannot include management or supervisory staff. The employer is also prohibited from retaining any portion of the tip pool.
In addition, New York law requires that tips be distributed to employees in a fair and equitable manner. This means that the tips should be distributed based on the amount of work each employee performs and the level of customer interaction they have.
It is important to note that these laws apply to the hospitality industry, which includes restaurants, hotels, and similar establishments. They do not apply to other industries or to non-tipped employees.
Summary of tip pool rules for the hospitality industry in NYC:
- the employer cannot keep an employees’ tips under any circumstances; managers and supervisors also may not keep tips received by employees, including through a tip pool;
- the employer that pays the full minimum wage and takes no tip credit may allow employees who are not tipped employees (for example, cooks or dishwashers) to participate in the tip pool;
- an employer that collects tips to facilitate a mandatory tip pool generally must fully redistribute the tips within the pay period; and,
- employers that do not take a tip credit, but collect employees’ tips to operate a mandatory tip pool, must maintain and preserve payroll or other records containing information on each employee who receive tips and the weekly or monthly amount reported by the employee, to the employer, of tips received.
What to do if you think your tip pool violates the law:
If you have questions about tip pools or the distribution of tips in New York, you may want to consult with an NYC employment lawyer or contact the New York State Department of Labor for more information.
At Mansell Law, we focus on wage and hour violations. The tip pool laws change frequently and have undergone significant changes in recent years. Contact the tip pool attorneys at Mansell Law NYC for a free consultation.
