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  1. #1

    Arrow Tip Pooling in a Catering Business

    My question involves labor and employment law for the state of Texas.

    Here is the situation. I work for a catering company in Central Texas. I never gave much thought to my tip pool until it came to light that the way the company handles tips is not immediately intuitive. I was under the impression that a tip pool can operate by dividing all the tip money for an event evenly among all the servers who work said event by their share of the total labor hours worked for that event. If this is too complicated, another way to run a tip pool is to simply pool all the tips that are accrued from all the events worked during that pay period and then dividing it among all the servers who worked during that pay period based on the number of hours they worked [in the said pay period].

    The issue that arises from both of the above mentioned methods is what to do when a client doesn't provide a tip right away? What if they end up sending the tip money months later? Does the catering company then do the calculation for that pay period in which it should have arrived and then divide it up among the employees for the month it should have been divided?

    This is not how my catering company does their tips. They don't apply tips based on which events you work for a given pay period. They simply pool whatever tip money arrives in a given pay period and that money is then divided among the employees regardless if they worked during that event or even that pay period.

    For example using the first two methodologies, if person X worked during the first month of January for 10 hours during that pay period, including all 10 hours for an event from company A, then tips provided by company A after the event during that same pay period should be given to person X based on the 10 hours they worked that event regardless of when those tips are paid to the company.

    Using my company's current methodology, if company A decides to tip two months later during a pay period when person X decides to take a vacation, person X does not receive a single penny from that tip. However, if person Y who just joined the company and never worked either the event or during the pay period in which the work occurred would receive as much money from that tip as would be alloted based on their number of hours worked during that pay period.

    Is this a correct/legal method to operate a tip pool or is this simply accounting laziness on the side of my catering company?

  2. #2
    Join Date
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    Default Re: Tip Pooling in a Catering Business

    The chances of a client sending a tip separately from a catering bill, months after an event, seems highly unlikely. Is this an actual scenario or is this a purely hypothetical, "What if I get struck by lightning"-type scenario?

    When the customer is invoiced, how is the tip calculated and paid? For example, is the "tip" a mandatory service charge fixed in amount by the catering company consistent with their contract with the customer? Is there a blank space for "tip" in which the customer can put in any amount? Or some other arrangement?

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