Tipouts

Tipouts, also known as tip sharing or tip pooling, is a practice common in the hospitality industry where employees distribute a portion of their tips to other staff members. This system ensures that all employees who contribute to the customer experience receive a share of the gratuity, even if they don't directly receive tips themselves. Typically, employees who receive tips, such as servers or bartenders, contribute a percentage of their tips to colleagues in service, support, or back-of-house roles, like bussers, dishwashers, or kitchen staff. The specific percentages and who participates in the tipout are usually determined by the employer or established through workplace policy.

The rationale behind tipouts is to acknowledge the collective effort involved in providing service. For example, a server might rely on a busser to clear tables promptly, a bartender to prepare drinks, or kitchen staff to cook the food. Without these contributions, the server's ability to earn significant tips would be diminished. Therefore, tipouts are seen as a way to foster teamwork and ensure a more equitable distribution of income within the service team.

There are legal considerations surrounding tipouts. In many jurisdictions, employers must inform employees about the tipout policy, and there are rules about who can and cannot be included in a tip pool. Generally, employees who do not have a regular and recurring contact with customers are excluded from receiving tips, and therefore cannot be part of a tipout arrangement. Employees must also be paid at least the federal minimum wage, and any tips they keep after tipouts must still bring their total earnings up to at least the minimum wage for the hours worked.