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Employment Law/Tip pool and salaried employees


70% of tips received by my department is put into a tip pool. My boss, Julie, is a salaried employee, and so is the kitchen manager. Julie oversees the tip pool and distributes the money to the employees, she gives herself and the kitchen manager the most money, and then distributes the remainder to the rest of without the use of a formula, it is purely up to her discretion. This past pay period, she allotted me $68, and herself $305. Is this legal? If not, who should I address the issue with? The owner of the company or the HR department, or a lawyer?
Thank you for any information, it is much appreciated.

I would start with HR and if she did not fix the problem take it to the owner of the company. Managers do not generally share in the tip pool at all. Arizona is a bit different.

Arizona state law gives food servers a raw deal when it comes to sharing tips.  

Businesses with revenue over $500,000 per year – which will include almost all restaurants – are covered under both the federal and the Arizona minimum wage law.

There appears to be a conflict here between the federal and Arizona minimum wage law. Under federal law, employees are entitled to all tips. Tip pooling arrangements are permitted only if the tips are shared between employees who customarily receive tips, such as bartenders, cocktail waitresses and servers.

However, under Arizona law, tip pooling that includes managers and food preparation staff is acceptable – as long as only the portion of the tips the server actually receives is counted towards the tip credit deducted from the server’s minimum wage. In addition, workers who do not customarily receive tips must be paid at least the minimum wage, even if they are part of a tip pooling system.

There may be a loophole here. Whenever a worker is covered under both state and federal law, the worker is entitled to protection by whichever law gives the greater benefit. In this case, it is probably the federal law. It is possible that the federal law would override the state law in this situation. For an expert opinion, contact the U.S. Department of Labor, Wage and Hour Division at 1-866-487-9243.


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Shirley McAllister, CPP, PHR


I can answer questions about payroll laws and payroll tax laws and Human Resource laws and agencies. I can answer federal payroll and human resource law questions and most states; I do not have a knowledge of the local taxes for cities and counties within the state. If and when I can I will try and send you the website where you can reference the answer and where you can obtain more information as well as a contact number if needed for that particular agency. Some agencies I have worked with are IRS, Department of Labor (federal and state), Revenue Canada (and provincial governments), Inland Revenue, OSHA (0ccupational Safety and Health Administration); Social Security Administration and National Child Support as well as other agencies in Payroll and Human Resources. Some Laws I am particularly familiar with are FLSA (Fair Labor Standards Act), ADA (Americans With Disabilities Act), FMLA (Family Medical Leave Act) COBRA (Consolidated Omnibus Reconciliation Act ) , QDRO's, QMCSO's, and other support orders and garnishments, USERRA (Uniformed Services Employment and Remployment Rights Act,PPA Act (Pension Protection Act of 2006, As well as most other employment type acts. I am also well versed in the Title V Civil Rights Act and the HIPAA (Health Insurance Portability and Accountability Act).


30 years in Payroll and Human Resources

SHRM (Society of Human Resources) APA (American Payroll Association) DOLEA (Department of Labor Employers Association) CPA (Canadian Payroll Association) NAPW (National Association of Professional Women) The Mentoring Network

PHR Certification in Human Resources CPP Certification in Payroll in U.S. Payroll Administrator and Payroll Supervisor certification in Canada

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