George,

In regards to an article entitled Boston's Finest Restaurants Serve Up a Food Fight, mandatory tip pooling creates a situation as Mr. Lichtblau, the attorney for a waiter at the Bay Tower has explained, where customers do not know how their tips and service charges included on their bill are being divided and to whom they are being paid.

While service charges under federal law are considered a payment of a charge, tips under federal law are clearly distinguished from a payment of a charge. Tips are voluntary on the part of the customer. Informing customers of how their tips are being divided and to whom they are being paid is illegal since customers have a constitutional right to determine for themselves if their tip is divided. When a tip is divided the amount is changed. Federal regulations clearly state in CFR 531.52 that whether a tip is to be given, and its amount, are matters determined solely by the customer.

An employer has no legal authority to divide a customer's tip among several employees, for clearly the amount of the tip would be changed. The other employees who the employer is mandating that the customer's tips must be shared with cannot be given part of the tip without the customer's instruction to do so for whether a tip is given to these other employees is a matter determined solely be the customer according to federal law. Mandatory tip pooling is in violation of federal law because undeniably it is turning the customers tip which is supposed to be strictly a matter for the customer to determine into a matter for the business to deterrmine. Businesses who mandate tip pooling are determining who should be the recipient of the customers tips and how much each of their employees should receive from a customers tip.

Customers have every right and ability to give tips to other employees if it is their intent to tip several employees. If the customer does not tip an employee then that employeee or those employees are not legally entitled to any part of that customer's tip. Businesses have no authority to give a customers tip to an employee who has not received the tip directly from the customer. Service charges have been clearly distinguished as what a not tips. While service charges may be distributed to employees who were not a direct recipient of a customers tip, service charges are not tips.

Federal law has clearly stated that an employer must allow the tipped employee to retain all tips. A tipped employee is the individual employee who has received tips from customers and is understood as such in CFR 531.56 which clearly outlines that individual tip receipts are controlling.

Just as an employer must pay each employee minimum wage of $5.15 an hour, an employer must allow each tipped employee to retain all tips. The argument that mandatory tip pooling still allows the tipped employees to retain all tips is not a legitimate argument when CFR 531.56 has made it clear that a tipped employee must himself customarily and regularly receive more than $20 a month in tips in order to qualify as a tipped employee. The argument that mandatory tip pooling still allows the tipped employees to retain all tips is not a legitimate argument when CFR 531.52 has clearly explained that tips are a sum presented by a customer. Obviously the moneys received from employer mandated tip pooling would not be considered tips for they are not being presented by customers but by the mandatory tip pooling.

The argument that mandatory tip pooling still allows the tipped employees to retain all tips is not a legitimate argument when CFR 531.52 has clearly explained that Only tips actually received by an employee as money belonging to him which he may use as he chooses free of any control by the employer, may be counted in determining whether he is a "tipped employee" within the meaning of the Act and in applying the provisions of section 3(m) which govern wage credits for tips. Employees that are included in a employer mandated tip pool cannot even be considered tipped employees. Clearly and undeniably mandatory tip pooling does not allow the tipped employee to retain all tips and as such mandatory tip pooling is in violation of the clear and concise fedral requirement that an employer must allow the tipped employee to retain all tips.

Fact Sheet No. 015 Tipped Employees Under the Fair Labor Standards Act (FLSA): Employers must allow the tipped employee to retain all tips, whether or not the employer elects to take a tip credit for tips received, except to the extent the employee participates in a valid tip pooling arrangement.

Mandatory tip pool is not considered a valid tip pooling arrangement for the moneys received from mandatory tip pooling cannot be considered tips. Only tips actually received by an employee as money belonging to him which he may use as he chooses free of any control by the employer, may be counted in determining whether he is a "tipped employee" Tips under FLSA has made it clear tips are used to determine whether an employee is a "tipped employee"

Sincerely,

Gary Reed and millions of tipped employees nationwide. (electronic mail, March 29, 2004)

See also: Where Does Your Gratuity Go?