tipsharing

Tipsharing, or tip sharing, is the practice by which tips received by service workers are pooled and distributed among eligible employees. It commonly occurs in hospitality and retail settings, including restaurants, bars, hotels, and event venues. Tip sharing can refer to two related arrangements: tip pooling, where a portion of tips is placed into a pool and distributed according to a predefined formula, and tip-out, where a portion is allocated to non-tipped staff such as bussers, kitchen staff, or support personnel. Some establishments combine both, or replace cash tips with service charges that are distributed.

Mechanisms of tip sharing typically involve contributions that are pooled and then allocated according to criteria such as hours worked, role, or seniority. Distributions may be made daily, weekly, or per shift. Electronic systems and point-of-sale integrations often facilitate tracking and distribution. In many jurisdictions, managers may or may not participate in the pool; in some cases they are excluded.

Legal and regulatory context varies by country and region. In the United States, tip pooling is generally allowed among front-of-house staff but not with managers; laws regulate tip credits, reporting, and wage compliance. Some regions restrict sharing tips with kitchen staff or require that tips belong to workers who provided direct service. In other countries, service charges may be retained by the employer or distributed to staff, depending on local law and policy.

Implementation considerations include clear written policies, transparency, fair distribution formulas, and compliance with wage laws. Potential benefits include improved service quality, reduced turnover, and recognition for support staff, while drawbacks can comprise disputes over distribution, dilution of individual earnings, and compliance risk.

See also: tipping, tip pooling, tip credit, service charge, payroll.