What Is Tipping Out?

August 31, 2024 3 min read Hospitality Economics Tipping Restaurant Industry Service Staff Gratuity Sharing Hospitality Practices

Tipping Out refers to the practice in the hospitality industry where servers share a portion of their tips with other staff, such as bussers or bartenders.

Tipping Out: The Practice of Sharing Tips Among Staff

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Tipping Out, or Tip Pooling, is a common practice in the hospitality industry where servers distribute a portion of their earned tips to other supporting staff members, such as bussers, bartenders, barbacks, and sometimes even kitchen staff. This practice ensures that the earnings from tips are shared more equitably among those who indirectly contribute to the customer’s dining experience.

Historical Context

The practice of tipping began in Europe and migrated to the United States in the late 19th century. Tipping out developed as a response to the realization that a team effort is essential to service quality. Over time, this practice formalized to ensure fair compensation for the supporting roles in restaurants and bars.

Different Types of Tipping Practices

Pool System

In some establishments, all tips collected during a shift are pooled together and then distributed among staff based on a predetermined formula.

Point System

Tips are allocated according to a point system where different roles are assigned different points, and the tips are distributed based on the total points accumulated.

Percentage System

Servers may tip out a fixed percentage of their total sales or total tips to support staff.

Special Considerations

Legal Aspects

Legal regulations on tipping out vary by country and state. In the United States, the Fair Labor Standards Act (FLSA) has specific rules that must be followed, including the prohibition of managers and supervisors from receiving a share of the tips.

Ethical Considerations

Tipping out practices must be transparent and fair, ensuring that all support staff receive a just share of the tips relative to their contribution and effort.

Examples

Restaurant A: Servers tip out 3% of their total sales to bartenders and 2% to bussers.
Restaurant B: A pool system where all tips are collected into a common fund and then distributed based on each staff member’s role and hours worked.

Comparisons

Tip Pooling vs. Tipping Out: Tip pooling generally refers to the collection and sharing of tips among all eligible employees, often regardless of who earned them directly. Tipping out specifically refers to the practice of servers voluntarily sharing a portion of their tips with others.

Gratuity: A sum of money given by a customer, in addition to the service charge, to staff for their service.
Service Charge: A mandatory charge added to a customer’s bill, which is typically distributed among the staff.
Minimum Wage: The minimum legal hourly pay for workers, which can be offset by tips in some jurisdictions.

FAQs

Is tipping out mandatory?

While not always mandatory, many establishments have policies in place that require servers to tip out certain staff as part of their employment agreement.

Can managers receive tips?

In most jurisdictions, managers and supervisors are not permitted to share in tips that are meant for non-supervisory staff.

How is the amount to be tipped out determined?

It is usually a percentage of the server’s total sales or total tips, as outlined in the establishment’s policy.

References

U.S. Department of Labor. “Wage and Hour Division (WHD): Tipped Employees.” link
Fair Labor Standards Act (FLSA). link

Summary

Tipping out ensures a fairer distribution of earnings among various staff in the hospitality industry. This practice recognizes the collaborative efforts involved in delivering a satisfactory customer experience. Proper understanding and implementation of tipping out can lead to more equitable compensation and better morale among staff members.