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  1. #1
    Join Date
    Dec 2014
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    2

    Default Tip Pooling Laws in North Carolina

    My question involves employment and labor law for the state of: North Carolina

    Greetings,

    I work in an upscale restaurant in North Carolina and had a few questions regarding the practice of tip pooling or tip sharing and was wondering if anyone had experience with this. I've been trying to figure it out on my own using the nclabor website but the sections I'm reading aren't very specific and I can't decide if what my employer is doing is violating north carolina law or not.
    http://www.nclabor.com/wh/Wage_Hour_Act_Packet.pdf
    13 NCAC 12 .0303 TIPS AND TIP CREDITS

    Overall it's a pretty good place and don't want to make any waves unless there is a pretty clear violation of labor law. We have a standard tip sharing arrangement. We pay 3% of tips for credit card processing (which is allowed) and then tip out another 12%. This is where my first problem is. We don't have a bartender, host, or back waits (we do all the seating, cleaning tables etc on most nights) so we're told the 12% tip out goes to the dishwasher. He doesn't do anything related to the front of the house (doesn't clean tables or reset for example) only washes dishes. We all like the the guy so don't mind him getting tipped out but some nights 12% can be $150+ and I have a REALLY hard time believing they are giving him that much money each night. Also depending on how many servers we have, it means he would be making more than the waiters. I always heard back of house employees can't be tipped out, so that's my first question. In NC can dishwashers be tipped out if they don't do anything related to the front of the house?

    Second issue is regarding managers being on tip share. Each night the manager on duty gets a full portion of our tip share. So if there are 4 waiters on duty and we make $1000 total after %3 for credit card, and 12% for tip out (to the dishwasher or maybe the house?) then we each get $200 and the manager gets $200, instead of the tips being divided among the servers (these are imaginary numbers unfortunately) Granted they usually will take -one- table, but most of the time they are doing managerial duties and not waiting tables. Having them take a table is also not on nights when we are too busy and need extra help. It is done specifically so they can be on the tip pool each night. We might only have 3 tables but the manager will be sure to still take one. We have two 'managers' neither of them are on salary (that I'm aware of), my impression is that my employer thinks its legal to have them on the tip share as long as they take one table and don't get salary. This way my employer doesn't have to pay a manager salary and can instead pay them minimum wage and then have their income be supplanted by our tips. It really ruins moral and really hurts our income. Each night we have an extra person to divide our wages with and this person does the lease work but gets an equal share of tips, plus more hourly. So my second question is "can managers ever be on tip share? can they be on tip share if they wait a table(s)?" Further what makes them a 'manager'? Is it how they are paid or they actual duties and ability to hire/fire people?

    There's a couple other issues with the restaurant I won't bring up now but if anyone has had the time to read this I appreciate it and sorry for the long post. Please respond if you have any experience or knowledge in this area. I've been told that their accountant makes sure everything is legal so they aren't doing anything wrong. NC is a right to work state meaning you can be fired for any reason and past employees have been fired for bringing up these and similar issues. I don't want to talk to them about it for fear or losing my job. But I'd be willing to do it if I knew that their tip share process was illegal. I'm struggling to make ends meet and knowing I'm losing almost a 4th of my income really hurts. It would be one thing if I knew the dishwasher was actually getting the money (he works hard) but I feel like they should pay him more if they think he deserves it and not take our tips. Same with the managers taking our tips, they should be compensated for the work they do but not by money left to us from customers who appreciate what we do. Thank you again,
    NcCase

  2. #2
    Join Date
    Nov 2013
    Posts
    7,056

    Default Re: Tip Pooling Laws in North Carolina

    This may get you started.

    North Carolina law allows employers to require tip pooling. However, only employees who customarily and regularly receive tips may participate in the pool. The employer may not keep any part of the pool. And, employees must end up with at least 85% of the tips they earned prior to contributing to the pool.

  3. #3
    Join Date
    Mar 2013
    Posts
    18,340

    Default Re: Tip Pooling Laws in North Carolina

    Why not call the NCDOL for the answers to your questions? They're the ones that interpret and enforce the laws.

  4. #4
    Join Date
    Dec 2014
    Posts
    2

    Default Re: Tip Pooling Laws in North Carolina

    Quote Quoting adjusterjack
    View Post
    Why not call the NCDOL for the answers to your questions? They're the ones that interpret and enforce the laws.
    Thank you for the response. I did call the NCDOL and the woman I spoke with did not seem to really have any knowledge regarding the law on tipped employees. She did say that she couldn't find anything in the federal or state statute that specifies where the tip out goes, so my restaurant might be correct they can use the tip out however they like.

    "North Carolina law allows employers to require tip pooling. However, only employees who customarily and regularly receive tips may participate in the pool. The employer may not keep any part of the pool. And, employees must end up with at least 85% of the tips they earned prior to contributing to the pool."

    I also read this several times and the laws regarding tipped employees is so short it's hard to know when it applies and doesn't. For instance "only employees who customarily and regularly receive tips may participate in the pool" seems pretty clear. Normally a manager wouldn't customarily receive tips so wouldn't be eligible to be in our tip share. But in our situation our managers are paid a much higher hourly wage instead of salary, so are they managers or just higher paid servers? Then they will usually take one table therefore acting as a server in their eyes, making them eligible for the tip pool. They might only contribute $20 but they still get a full share of our tips. Every person that is on the tip pool that isn't actually contributing tips brings down everyone else's pay dramatically. For example if we have 3 servers and collectively make $500 then we end up with $166 before tipping out 15%. But if the manager takes a table then we end up with $125 before tipping out %15. So close to 1/3 less pay per night. And the manager is getting paid hourly while we get paid $2.13 an hour.

    When I did call the NC DOL for information she did mention something I had never heard of regarding this passage…
    The requirement of 95-25.6 that the employer pay "tips accruing to the employee" shall be satisfied if the employee in a tip pooling arrangement receives 85% of the employee's actual tips before pooling or the employee's share received from the pool, whichever is greater.

    If anyone can clarify for me please do but I'm reading this as the employee gets to keep 85% of their tips or their portion of the tip pool -whichever is greater-. Meaning the nights when I'm making $250-300 in tips before tip pooling and end up with $130 after tips are divided equally among all the servers I should be getting 85% of $250-300. I have never heard of this before about tip sharing but the NC DOL woman seemed convinced it was accurate, but if it was true then what would be the point of tip sharing, and it would also mean the majority of the time tip shares wouldn't be legal. Unless the employer makes up the difference between $120 and 85% of 250, which is $212? Does anyone have experience with this area of wage law and willing to help me make sense of this? Here is the full NCDOL pdf link, you can look in the index for the part dealing with tips, waiting tables as I'm not sure how to correctly cite it.
    thanks,
    ncCase
    http://www.nclabor.com/wh/Wage_Hour_Act_Packet.pdf

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