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Restaurants posting tip sharing policies

In Minnesota, over the past few months, several restaurants have started promoting the fact on the menu that "All gratuities are shared across our entire service team (waitstaff, bus staff, and cooks).)

A couple of questions

1) is this part of a national trend?

2) the service at these restaurants was well below norms for restaurants of similar quality. Admittedly a small sample size, but i wonder if this type of arrangement discourages waitstaff from extra hustle since they would receive less upside.

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  1. Don't think it's part of a national trend. I've never seen such a sign.

    In some states it would not even be legal to make waitstaff who are legally paid less than minimum wage have to share tips with cooks who must be paid full wages (same with management, anyone with an ownership <even if tending bar>).

    Does it discourage waitstaff from hustling?

    There are two schools of thought and a lot depends on whether the verbiage you quoted means there is a tip pool, OR if it means the server MUST tip out a percentage of tip received to busperson, line cook, bartender, etc.

    If the former, it kills individual incentive. If the latter, the more $$ a server gets as tips, the more $$ servers keeps after mandatory tipouts.

    Personally, as a patron, this is none of my business. The sign may be meant to encourage a patron to tip more knowing that others besides the server must share the money tipped, but to me it's a turn off.

    4 Replies
    1. re: bagelman01

      didn't starbucks get sued for directing some of the money in the tip jar to management?

      1. re: westsidegal

        In Massachusetts alone, Starbucks had to pony up 14 million because it had managers sharing in the pooled tips

      2. re: bagelman01

        <The sign may be meant to encourage a patron to tip more knowing that others besides the server must share the money tipped>

        I tip for service. If the service is stellar I'll tip between 20-25%. I have no idea where the tip goes after I've left it. I *certainly* would never leave more because the sign implemented was designed for me to tip higher to cover every other worker in the restaurant.
        If the server wants to tip the chef to make sure his/her order comes out quickly then that's the prerogative of the server. It'll have to come out of the tip I leave...

      3. Are the restaurants really phrasing it in terms of gratuities or are they using a service charge? Traditionally, restaurants have had much less leeway in terms of redistributing a voluntary tip or gratuity to the back of the house than they have had with a mandatory service charge. Here is a quote from the US Dept. of Labor:

        "The requirement that an employee must retain all tips does not preclude a valid tip pooling or sharing arrangement among employees who customarily and regularly receive tips, such as waiters, waitresses, bellhops, counter personnel (who serve customers), bussers, and service bartenders. A valid tip pool may not include employees who do not customarily and regularly received tips, such as dishwashers, cooks, chefs, and janitors."


        As for national trends, it should be noted that in San Francisco, the two Michelin star restaurant Coi has had the following phrase on the menu for several years: "18% service charge (shared by the entire staff)" My understanding is that the motivation is to lessen the income disparity between the tipped and non-tipped employees. California's minimum wage law does not have a tip credit. The implication is that a junior kitchen employee who makes minimum wage or a little more often makes way less money that a cocktail waitress who is subject to the same minimum wage law but may make bundles in tip on top of her wage if she works at a successful establishment. (Currently, the minimum wage in San Francisco is $10.55 regardless of whether the employee receives any tips.) A mandatory service charge gives the restaurant the ability to provide a more equitable income distribution without increasing the cost of dining out. Presumably, if there is an 18 percent service charge, people will decrease their tips accordingly.

        I have no idea about what's going on in Minnesota, but it's a state that, like California, does not have a tip credit when it comes to minimum wage.


        1. Very common in the UK, where, increasingly, places levy a service charge instead of the old-fashioned tip.

          I'm all in favour of it and think it's a great idea which, in my view, leads to improved service levels across the restaurant as the staff work as a whole team, rather than as individuals. I do not want serving staff to "hustle" so, if it works to discourage that as well, then there's a double benefit for me.

          I think the OP should welcome it and encourage the restaurants to continue by drawign the managements attention to both the gopod points and the bad points where they are experienced.

          1. I believe the restaurants you may be referring to are the couple establishments where the chefs double as the waiter.

            It's a known policy in any professional establishment that waiters tip their bartender and bus staff at the end of their shift.

            Unless you work for a large establishment (typically hotels),as a waiter you arent claiming your tips as income and a taxpayer such as myself is contributing to your tax refund at the end of the year because you arent paying any payroll taxes.

            4 Replies
            1. re: shikken

              I have a BIG problem with your final paragraph....
              "Unless you work for a large establishment (typically hotels),as a waiter you arent claiming your tips as income"

              You better be claiming tip income or expect the wrath of the IRS to come down on you. Restaurant owners are expected to show employees receiving tip income of no less than 8% of sales. On a bad snowy night it's possible to be taxed on tips not earned.
              Tip income is not subject to social security taxes, BUT it is subject to Medicare taxes. I recently did taxes for a family member whose paychecks and w-2s show this reported tip income.

              Don't believe that anyone who files an income tax return and lists occupation as server/waiter, etc and had a W-2 from a restaurant can get away without declaring tip income, those days are gone.

              This is not to say some don't lie, cheat and underdeclare the tip income.

              1. re: bagelman01

                "Restaurant owners are expected to show employees receiving tip income of no less than 8% of sales."

                Just curious but how on earth are the owners expected to do this in an old-fashioned traditional tipping environment - where the tip passes from customer direct to server.

                I understand how it's easily done with a service charge system, such as we often have in Europe, but not in a cash system.

                1. re: Harters

                  It is "assumed" income. It gets reported by the employer whether there were tips received or not.

                  1. re: Harters

                    There are different systems in place ranging to filling out a paper form to balancing out the servers orders on the computer. Sales are tallied, tips are entered. This is done per shift.

                    At the restaurants I have worked, particularly in the last 20 years, the majority of bills and tips are paid by credit card. That makes it difficult to under report.

                    Under reporting can come back to bite you when applying for a mortgage, etc. There may be some who do it, but IMO it just doesn't happen to the degree it once did. There are also enough eyes among the rest of the staff that would make it difficult for someone to do this with any frequency. Lastly, if a server is receiving consistently lower tips the management will assume their customers are not happy...

              2. This policy is called 'shared tips' and I don't like it as it takes away from good servers to those who are slackers.

                1. Finding myself in this position I find the following
                  1 I have no incentive to turn tables even if there's a wait
                  2 I feel I'm paying for the salary of the cooks etc. so my employer doesn't have to
                  3 Why as a seasoned server am I making the same money as a 20 year old hostess where insuring a good dining experience falls mostly on my shoulders?

                  10 Replies
                  1. re: Maryelle

                    "...where insuring [sic] a good dining experience falls mostly on my shoulders?"

                    So you not only took the order and brought the food to the table, you were responsible for planning the menu, ordering the products needed, prepping the food, cooking my order, washing the dishes my food was served on, etc., etc.

                    A "good dining experience" requires a large number of people all performing different duties. They all deserve to be rewarded.

                    1. re: kmcarr

                      Except for service personnel, all those employees are rewarded through their paychecks from the owners of the restaurant.
                      The government (in many states) has chosen to permit owners to have service personnel be dependent on patrons' largesse for their livelihood.
                      While service personnel may make good money on good shifts, they can be hit hard on bad shifts. Last Friday we had 8" of snow. The cooks and kitchen peronnel in the cafe around the corner from my home made their full pay. The servers who faced a pretty empty dining room averaged about $18 pay for a 5 hour shift (my tenant works as a waitress serving lunch there, and as there was no school my 16 year old babysat for the tenants' kids, the tenant didn't make enough to pay my daughter, but daughter refused to accept anything from this single mom).

                      1. re: bagelman01

                        One extreme data point does not a valid argument make. There really is no debate that on average servers earn more than line cooks, bussers and dishwashers.

                        But that really wasn't the point of my post above. Maryelle stated that the lion's share of the responsibility for a "good dining experience falls mostly on (her) shoulders". I disagree, a good dining experience has a full team behind it.

                        Also, you and Maryelle are making the assumption that the base salary of the service staff has not been adjusted in this instance cited by the OP to accommodate the tip pooling policy. There are no facts in evidence to support that assumption.

                        1. re: kmcarr

                          I'm not saying there is no team work but I am stating for a fact that everyone hired except management get the same salary regardless of what position they are in. I was told this when they hired me 6months ago. This is not an assumption. So if you think about it is is on my (all our servers) shoulders to give good service otherwise nobody else get more than minimum wage.

                          1. re: Maryelle

                            Am I understanding you correctly, that at the restaurant you work at everyone besides management makes the same hourly wage? The bussers, dishwashers, line cooks, hostesses all get exactly the same rate of pay? Doesn't that kind of destroy your argument that that servers should get to keep the tip since they are paid less than everyone else, and below minimum wage?

                            1. re: kmcarr

                              Who said we get below minimum wage? Like I said, what is the incentive for waiting tables when the hostess job is so much easier and we all get the same wage.

                              1. re: Maryelle

                                Well, I suppose an incentive is that there is probably only one hostess and several servers, so actually getting a job is easier if you work as a server.

                                That said, I'm surprised that everyone - cleaners, chefs, servers, etc - are on the same wage. Is the owner a communist?

                      2. re: kmcarr

                        I'm just saying in the past the cooks, preps , were paid a higher salary by the owners and were tipped out by the servers a %. In this case they are not, all the servers basically pay their wage. If this were the case in most restaurants I don't think waiting tables one would be able to make as good a living.
                        What would be the incentive to want to be a server when you could be a hostess with a much easier job but get the same pay?

                        1. re: kmcarr

                          Only if they all work for 3 dollars and 50 cents an hour what just like the servers do!

                          1. re: PotatoHouse

                            Did you read my reply to bagelman above? (http://chowhound.chow.com/topics/8935...) You are making the assumption that no adjustment in base wages have been made to account for the tip pooling policy. The OP supplies not evidence to support that assumption.

                            My own opinion is that tipping should fade away, replaced by standard service charges or simply have the full cost of labor folded into the menu price. As a step toward that end I find the tip pooling policy described by the OP, with necessary adjustments of base salaries, more equitable than current tipping paradigm.

                      3. I've not heard of tip sharing with cooks..that's for sure. I have heard of waitstaff giving a portion of their tip money..usually some percentage..to the bussing staff and the bartenders...but the cook? I would hope the restaurant was paying their cooks well in the first place.
                        I think it's kind of off putting for the restaurant to advertise a tip sharing policy to the customers.

                        4 Replies
                        1. re: BlueMagic

                          "I think it's kind of off putting for the restaurant to advertise a tip sharing policy to the customers."

                          That's probably due to a difference in cultures where you are, to where I am (where it's quite common to see something along those lines, printed on the menu).

                          Place I'm eating at tomorrow adds "Please note a discretionary 10% Service Charge will be added to all bills. It is your right not to pay. If we fail to justify it in any way, if you are unhappy about this for any reason, or if you simply disagree with the principle, please bring this to our attention & we will strike the amount off from the bill."

                          Another of my local places has "Service charge is payable at guests discretion and is distributed to all staff".

                          1. re: Harters

                            Yes..I agree that culture has a lot to do with it. I think that we in the US tend to take the whole "tipping concept" to the extreme.

                            My feeling is that "the tip" should really be a transaction between the server and myself. I don't like a restaurant setting the policy. My feeling is that if the restaurant owner is implementing a service charge, then they should instead just figure out how much they need to charge for a meal in order to pay their employees fairly..not rely on customer for such things.

                            1. re: BlueMagic

                              I'd agree with you. Whilst I generally prefer the service charge to old-fashioned tipping, I'd rather see restaurants adopt the French way of service being included in the posted menu price.

                              Another place I know has their policy along the lines of "Our prices fully include service and nothing further is expected, but if you wish to leave an additonal gratuity, it will be appreciated". FWIW, I've never left an additional gratuity.

                              1. re: BlueMagic

                                I, also would like to see employees fairly compensated by the establishment for their work and remove the tipping system in the US.

                                BUT>>>because of tax regulations and structure in some US states tipping instead of an added service charge actually saves the diner money.

                                Example: Here in Connecticut, if the restaurant applies a service charge or manadtory tip, it is subject to state sales tax. If the diner tips, it is not subject to that tax 6.35%).

                                I dine out to the tune of at least $500 per month. Therefore assuming a minimum $6000 per year with 20% tip, my tip cost would be $1200 for an out of pocket total of $7200. If the restaurant added that 20% as a service charge, I would have to pay an additional $76.20 out of pocket.

                                And...the chances are that I would still give an additional cash gratuity for excellent service on top of the standard service charge.

                                Lastly, if the restaurant collected these fees and dispersed them to the employees as a higher salary, prices would have to be increased by more than the amount collected.
                                When payroll increases, associated costs to the restaurant such as social security contribution, workman's comp insurance, federal and state unemployment insurance all rise as well,
                                That 20% raise to employees to cover an average 20% tip rate would probably necessitate at least a 25% raise in menu prices.
                                So, instead of a $100 meal costing me $126.35 including tax and sales tax, now it would cost me $132.94.
                                If one only eats out occasionally, it might not matter much, but based on my $500/month scenario it would cost me almost another $500 per year

                          2. 1) Yep. It's called 'socialism'... aka "spreading the wealth around". If you work hard for your tips, you will be justifiably angry at being robbed. If you're not such a hardworker, you will want to proceed to full communism.

                            2) Yep. Capitalism (where success is rewarded by getting paid MORE (unequal distribution of wealth) creates incentive. Socialism (in terms of equal distribution of wealth) dishonestly called 'equality' and 'caring for the poor' not only robs you of the fruits of your labor but also requires those who don't work so hard to rob you of your dignity by calling you 'selfish'.

                            1. It's also known as "tip pooling" and it's fairly common, despite being illegal in many circumstances.

                              It's a scumbag practice really, and I would let the managers know that you won't be patronizing their place if they are going to cheat their employees out of reasonable realistic wages for their work.

                              Basically the restaurant doesn't want to even pay minimum wage for its workers, so it's trying to classify more of them as "tipped" employees so it can legally pay them less than minimum wage.

                              By law, if the server doesn't earn at least 8% of their total sales in tips, the restaurant is *supposed* to make up the difference to bring them up to minimum wage - but they NEVER do this. They will either pressure the employee to lie and claim that they made the 8% at least (which in turn causes them to get taxed on money they never earned), or they will go back and make the adjustment themselves behind the employees back.

                              I don't know exactly how it works when the tips are being distributed to other employees as well though, since they don't technically have any "sales" to base the 8% off of - only the server did.

                              I wish more servers would start banding together and suing their employers for doing crap like this. I didn't even find out that any of this was illegal back when I worked at TGI Fridays years ago.

                              They used to tell us that we would get audited if we claimed less than 8% on a give night. Well guess what, sometimes that happens, and it's the restaurant's responsibility to make that up - which they never did. I should have claimed less than the 8% when it happened, and if they audited me, I would drag the restaurant into it and have them prove that they made up the difference in my lost wages.

                              1 Reply
                              1. re: Atomic76

                                not making at least what amounts to minimum wage via tips is not on a shift-by-shift basis. it's cumulative over the pay period.