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Tip pool ruling cuts restaurant costs

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Articles - January 2011
Thursday, December 16, 2010

0111_ATS01A recent ruling by the Ninth Circuit Court of Appeals that allows food service employers in Oregon and Washington to require employees to participate in a “tip pool” is being welcomed by the industry but not some workers.

A Vita Café server sued the Portland restaurant in 2009 in protest of the pool in effect at the time. The ruling will allow restaurants to redistribute some of servers’ tips without violating federal wage and hour law. Oregon Restaurant & Lodging Association spokesman Bill Perry says the ruling gives restaurant owners another way to get around additional costs such as the minimum wage increase effective this month when Oregon’s minimum wage will go up 10 cents to $8.50 an hour. But the server community is worried about the ruling’s implications. “We’re not against tip pooling,” Portland Restaurant Workers Association spokesman Jim Nolan says. “We just think the power to make that decision should be the worker’s, not mandated by the employer.”

Though most servers balk at a system that seems to be a disincentive to provide good service, Perry asserts tip pooling is beneficial to a business as a whole. “Some servers will see themselves as a ‘wage earners’ rather than a ‘commission salesperson,’” he says.“[But] it does give restaurant owners a new management tool.”

With the tip pool, restaurant owners can lower base wages of employees who often are not tipped out, such as cooks, and supplement their wages with tips that are typically distributed to servers. This can help lower prices and keep customers, Perry says.

Randy Capron, maitre d’ of Huber’s, Portland’s oldest restaurant, sees the practice as effectively lowering server pay. “You’re walking away with an 8% not a 20% tip.” Capron says.

The full implications of the ruling for the restaurant and hospitality industry are still unclear. Hospitality law expert Greg Duff recently wrote on his blog: “The short answer is ... that employers in Washington and Oregon may initiate mandatory tip pools under certain circumstances.”



-1 #1 RE: Tip pool ruling cuts restaurant costsVettegirl 2011-01-05 11:40:27
Min wage in Oregon went up to $8.50 not $8.60 as of Jan 2011
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Robin Doussard
0 #2 Minimum wage correctionRobin Doussard 2011-01-05 13:33:18
Thanks for the catch, Vettegirl. We will correct.
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-2 #3 Owner is cook...SJR 2011-09-17 16:04:35
If the owner is the cook, can they demand that the server give them 50% of the tip
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G money
+5 #4 Stealing the customer's tipG money 2011-09-28 14:07:02
As a customer who regularly tips workers in the service industry, my message to restaurant owners is, get your greedy hands off my tips. If I want my tips shared, I will share them myself. Do you understand?

It's amazing that restaurants are getting away with stealing the tips we customers present their employees. We are not tipping so that the restaurant owner can pay his non-tipped workers less and use the savings to lower his menu prices. We are tipping to increase the earnings of a worker who we wanted to tip.

It's real simple. Get your greedy hands off my tips. As the person who is tipping, I have third party rights which entitle me to insure that the person whom I have tipped receives my tips.

This goes for the judges who are aiding and abetting business owners in stealing the customer's tip. There is no excuse for this.
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+1 #5 It takes a villagefred 2011-09-30 18:14:50
I own restaurants.

I believe the server deserves the lions share of a tip. It's their dedication to the customer's needs that generated that tip. But I also believe the guest experience, from the cocktail they ordered, to the clean plate their food is delivered on, and of course the properly prepared food, took a huge amount of work from the other members of the restaurant. They deserve to share in a small amount of that tip.

We share about 25% of a tip between the host, runner, manager, service bar tender and kitchen staff. The server walks with 75%. And servers are making 3 - 5 times what a host, runner, or cook makes. In most restaurants the server is making more than their managers.

We constantly promote team work in the restaurant, and tipping out the people behind the scene is just that, team work. Without team work, the restaurants we love and frequent in our kick ass restaurant town would not exist. Instead we would be a town of Applebees and TGI Fridays.
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Bryan Wilson
+3 #6 A customer perspectiveBryan Wilson 2011-10-08 14:03:29
I worked in restaurant service in high school as a busboy and as a server throughout college in states where waiters were paid $2.13/hour. It was always standard practice for waitstaff to "tip out" other employees such as cooks, bartenders and bussers. It was never enforced by management, but it was definitely a good idea, because as the above restaurant owner notes, a positive dining experience involves the team work of everyone. If you have a pissed off cook for example, everybody starves. And if you didn't take care of your kitchen and bar staff, they didn't take care of you - and you would not last long, because you couldn't take care of your customers. And if you couldn't take care of your customers, you would starve.
Even with being paid $2.13 an hour and with tipping out other staff, a decent waiter still made decent money for what is actually a pretty fun job. An excellent waiter made damn good money.

So the [blocked]ing and moaning from Oregon restaurant servers over this issue really sticks in my craw. Because I find, overall, the quality of restaurant service in Oregon to be pretty appalling.

When I speak of service, I don't mean the quality of food or the atmosphere, I mean the actual person taking your order and serving the food. Poor attitudes, inattention, not knowing the food, general incompetence, and a complete lack of responsibility for the customer's dining experience is something I encounter far too often. Poor attitude is the most common - and really ruins things for me. I guess its just something I really notice because it is a sharp contrast from what I and everyone I worked with learned and practiced in serving food. Because you literally lived on your tips, you left your personal problems at home and focused on the needs of your customer's, and in the process, I learned that it is actually a joy to be cause in a great experience for other people

I don't eat out in restaurants nearly as much as I otherwise would because the service is so often sub-par (IMO). I actually like to tip 20% or more because then I've had a great experience - and the waiter made that happen. And I resent tipping 10% to someone who acts like they're doing me a favor by taking my order and bringing me a couple plates of food - and doesn't give a crap when they get it wrong or forget to bring the beer I ordered. This happens ALOT. And hey, I am really an easy customer to wait on - because I know what it's like. I think more Oregon service workers need to learn how (and what a pleasure it is) to provide a great experience for someone eating at their restaurant, and I'll spend more money eating out and tipping generously. Until that happens, I'll stay home and serve myself.

[caveat: my dining experience is mostly limited to Eugene, and Salem. I have had fewer, but slightly better experiences in Portland]
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0 #7 Legal stealing is still stealing.notthead44@gmail.com 2011-10-28 13:30:37
This is stupid. Pay your employs and keep your greedy hands off the Servers money...The Server should make more than the cook, Howo many cooks do you see that are clean cut and able to go out and talk to people ???? Almost all the cooks I have ever worked with were not able to Serve, attitude or appearance. So now you want to pay both the same. So that would be why the service is sub par. You no longer have the clean cut attentive person waiting your table, you have in most cases a new inexperienced wait person. Someone who does not make more than their cooking counterparts. No separation means the same level of caring all around. The cooks need to be paid by the business not the co worker. Shut them all down if you can;t pay your bills. Stealing from employees to stay open is not the American way is it??/
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+2 #8 Drowning in a PoolGuest 2012-12-04 01:44:02
I'm a professional sever. Twenty years under my belt. I started in restaurants back when service really was good service. I still hold myself to that standard. I've creating a loyal following of clientele and have almost always been the most requested server ever place I've worked. My clients have become like family over the years, and in return always take wonderful care of me.
Now your saying I should pool my tips with the rest of the staff. Whether it be a younger, less experienced team member or the manager? Really the manager. The manager should be compensated by the owner, NOT the server. If you manage a restaurant it's a job you have chosen. Same for cooks. If you want to be like a server, be a server. I don't complain when I watch the Food Network and see dozens upon dozens of famous well paid chefs. They chose that job and worked hard to get there. Name a famous waiter??? Just one?? I choose to be a server and am happy being one, but don't cut into my well deserved money. Host, bidders, runners get there cut. They can also work hard and move up in rank. Tips are not a form of compensation for low salary or minimum positions.
Pooling has created a new lazy selfish generation of both waiters and cooks. A bunch of chiefs and not enough Indians, if you will! As a customer you should be aware of where your tip goes. The owner pays the staff less and drives away in a brand new car.
Here's some food for thought
Servers generally work less hours. Sounds nice! Although working less hours usually makes their position exempt from health care. Not the server pays for their own healthcare. Not cheep!
Almost everyone else other than the server tipped out doesn't have to claim that money. You know taxes. So you tip me, I share that in a pool, but then I have to claim taxes on my sales. Really?? This sounds fair??
You can chose to tip however much you want. I have no choice in the percentage I tip put to each person or department ie BOH, management. More of my money leaving the hands that worked for it.
One last point, I must say I agree that service has declined. I rarely get the same kind of service that I would provide when I go out. That being said, the customer has changed too. Jig your going out in public to eat armed with your yelp reviews and cell phone on the table, take a long hard look in the mirror. Do you understand what it means to be a good dinner???
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+2 #9 Who should your tip belong to?Guest 2013-01-22 21:29:33
As a customer who tips many types of workers, shouldn't it be the customer's right to determien who his tip belongs to? Why are business owners taking it upon themselves to determine who the customer's tip belongs to. What they are doing is they are spending their customer's private property, their tips. It's as illegal as any other form of stealing. There is no excuse.
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0 #10 Food DudeGuest 2013-06-12 12:22:01
How is it fair that the kitchen staff do not share in the guest experience? This is beyond me. Although I see it suggested that kitchen can be included in the tip pool, I've never seen that allowed under the FLSA, so I believe this is incorrect, no matter what the State approved. Futhermore, as minimum wages rise in States that do not allow cash wages below minimum wage (tip credit), whiich Wash, Ore, and Calif do not, there will always be this struggle to 'balance' wages throughout the business using tip pools. The alternative (which I am seeing more and more of) is that restaurants move to madatory gratuity (service charge). In such instances the house thereby owns all these proceeds and may do with them as they wish (Wash requires patron to be made aware). Be careful what you wish for, it may just go away!
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+2 #11 SalesGuest 2013-06-12 22:29:49
A server is similar to a commissioned salesperson. They get paid for attracting, satisfying and maintaining customers. Their earnings are directly related to the quality of service they provide. The server manages the customer experience, manages the resources to deliver the product properly and suffers the financial and emotional repercussions if things go bad. The server's performance is rated by customers. And is paid accordingly.

Cooks, managers, assistants and support staff are salaried as are manufacturing, admins and service people in industry. Their salaries should be based on their performance as rated by management. In some organizations they may also be able to share in a bonus if the overall restaurant profits are good, based on established criteria.

Tip your server with cash. And, pay for performance.
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-6 #12 ms.Guest 2013-07-23 21:54:50
To begin with the Server makes min wage of $8.95 per hr. plus tips, that's a good wage. I shouldn't be required to tip them when they already make min wage without the tip. Do a good job, share your tip with the rest of the crew and then claim it as income on your taxes as I am required to do with my income. Restaurants are expensive, I will not pay 20% tip to anyone who already makes min wage not matter how good they are. With tips you guys can make $30-45000 a year, and that's not even fulltime. Cry me a river... no pity here
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+4 #13 Hey guest 12Guest 2013-07-23 22:24:43
Reply to guest 12. A: no one wants to serve you anyway. Your cheep and don't understand the experience of going out to dine. B: your missing the point, do you claim taxes on your own form for other people you work with? Your a prime example of why everyone should wait tables for at least a week!
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-1 #14 Servers will kill restaurants in ORGuest 2014-07-23 04:51:40
I am an owner. In 43 other states, I can hire 4 servers for what I pay 1 server in OR. Instead, I have 2 servers. So half the staff, and twice the cost for me. We have had to go "semi" fast food in order to stay afloat. Now, you come in, order at the register, pay then we deliver the food. Basically, I pay 4x the wage for high paid food runners/buspeople.
Let me remind you. You are a foodserver....u nskilled labor. You want $9+ an hour? OK. In exchange, customer service suffers, prices are higher so we ALL can subsidize your lack of education and skills.
Get real legislators in OR. Give owners a tip credit. We can hire more people who will still make a good living, lower our payroll taxes, give better customer service. Join the other 43 other states who do this.
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0 #15 Can't Force Pool Tips if Given Tip CreditGuest 2014-07-24 18:05:51
To those proposing giving owners a "tip credit" to allow for paying less than minimum wage, under that system you cannot force employees to pool tips. The whole premise is you can pay less than minimum wage because they keep all of their tips. Restaurants all over NYC got sued left and right over this issue. Mario Batali had to pay $5 million to cover wage claims when he had mandatory pooling in his restaurants
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0 #16 RE: Tip pool ruling cuts restaurant costsGuest 2014-07-24 18:12:50
Not exactly true - Starbucks and Batali were cited for including prohibited tasks in the pool, not for pooling. Pooling laws vary by state, but generally pooling is accepted nationwide as it complies with the FLSA rules. I'm seeing high minimum wage state operators switching to service charges and eliminating wages. This allows the operator to fund wages of any task. If this trend of rising minimum wage continues, and states do not honor the tip credit (Seattle), the waiters may soon find their $30 and hour in tips fall to zero and their take home pay = minimum wage. Be careful what you wish for, it may come true!
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+1 #17 RE: Tip pool ruling cuts restaurant costsGuest 2014-12-14 05:14:34
oI have read all of these comments and now I will give one of my own. I am a cook In Oregon and I have also been a manager for 25 years in the restaurant business in Idaho. I have read and reread the minimum wage laws in Oregon and I'm telling you as far as the wage goes that's a good thing but the tipping protocol sucks!! it doesn't suck for the server though does it Hmmmm so here it is in a nutshell the server makes minimum wage plus tips cooks bussers are not eligible for tips and Oregon has kind of a by-law that doesn't really allow tip pooling - so tell me servers and yes I have been a server how is that fair to your team who are responsible for the overall meal that you make twice to three times to four times as much money as them and you don't feel justified in sharing your tips so all of the cooks should just quit and become servers. There was a comment that you should all try serving for a week well I'm sitting with a manager background and service background you should all try cooking for a week. you are not going to get that food quality attitude cleanliness from just a normal cook. with a server making minimum wage in Oregon the same as a cook plus keeping all of their tips really isn't a fair exchange to be equivalent to cook should be making 20 to 25 dollars an hour but that's not going to happen when the servers are going to keep whining and there is no win win situation because of politics in Oregon so I need to turn in my spatula and be a server we should all be servers oh but then we won't have any more cooks get my point
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0 #18 RE: Tip pool ruling cuts restaurant costsGuest 2014-12-15 21:46:29
Everyone does not tip ! And to be required to tip out the cook 10% of my food sales when I might not have gotten a 10% tip from that table. I will already be taxed by the government on what they think I made. In some cases it feels Luke I am working for the cooks !
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0 #19 RE: Tip pool ruling cuts restaurant costsGuest 2014-12-19 06:45:57
he a verage tip is 15 to 20 percent- the government can't take tips for what they don't know they can only take an estimate from your credit card receipts and a basic cash flow... again I will repeat myself -servers in Oregon make minimum wage really really close to the same wage to the standard cook thanks but cooks are not eligible for tips so you're 10% of tips over the night plus your minimum wage does not equal the wage of a cook in Oregon and in Oregon it is not legal to do a tip pool..... so servers are actually making a very very good wage and whining about it because they don't want to tip their cooks and bussers who are part of the whole team so you can get those tips.... try living in Idaho or a neighboring state were servers wages $3.45.... this is why in those states you get 80 percent of your tips and you took out your cooks and bussers 10% because you're thankful that they do their job- but in Oregon the servers are saying give me give me give me - you really have no concept of the team that it takes to put out food for customer give those tips you should be appreciative of your team and not just your pocketbook because Oregon has a higher minimum wage for servers than any surrounding state.... so I turn in my spatula because I'm getting the same wages you but not getting tipped I guess we have no cooks anymore..... and truly it's not the servers fault its the states fault for allowing this law but it saddens me in a service industry the servers don't get the whole picture --it's all about money isn't it
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+1 #20 Tip pool ruling cuts restaurant costsGuest 2014-12-19 19:32:06
Really? Why are we surprised by the ruling? It came from a Ninth Circuit Court of Appeals Judge. Just another way of pressing the liberal agenda known as "wealth distribution". I tip at least 20%, usually more, when I receive quality service because I know what it's like dealing with the public. I also believe the servers should voluntarily put in some of their tips to share with the other staff (i.e. cooks, dishwashers, etc.) because they are indirectly responsible for the service. However, the government or the restaurant have no business in making this a mandatory requirement. As others have mentioned, today's service is extremely lacking and this ruling just removes any incentive for the server to excel in their job. The thought process might be: Why work harder if I am required to share my tips with other employees including other servers who provide poor server?
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+1 #21 Well SaidGuest 2014-12-20 00:32:42
The comments made by #11 & #20 are exactly the way it is. Professional servers provide so much more than what most people relize.
Comments from #12 & #14 have no clue of how it works. #14 you have restaurants in 43 other states. Well guess what if you want to be part of Oregon, you have to play by Oregon rules. It sounds like really you could afford more than two servers if you weren't so worried about cutting into your corporate profits. #12 you just sound cheap, Applebee's will always be there for you.
As for the cooks complaining on here, first there has always been a kitchen tip out. This isn't even about you. Work hard, become a chef, open your own place. Then you will appreciate your sales force.
I think the pooling is more about being forced to share my money with other lazy, non requested servers. Bad servers love pooled tips. Why because they make more than they could on their own.
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0 #22 People who have no clue..Guest 2015-11-06 09:16:04
I have been also in the food industry, for over 25 years. Manager, cook, busser , host u name it.. For half of u that claim that us servers are whiney and needy is ridiculous.. For, one yes the cooks the food, but then after, we take care of them, there needs do not stop with the food. We never stop with that table which is at least an hr. There are places that do not have bussers, or her sts. So when never stop working, and we could have a great number for f tables. There have been people who look for me and sit in my section, and some that ask if we pool tips. When I say now they feel relived. Because, sometimes the food is not up to par, or other servers lack..
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