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Working in a service industry, such as in restaurants, bars, or other establishments, often means that tips from patrons supplement your income. Receiving tips can be a significant part of your job satisfaction, offering tangible recognition of your hard work and excellent service. However, the concept of tip pooling, where tips are collected and distributed among employees, may bring up various questions and concerns. This article aims to shed light on tip pooling, its legality, and how to navigate any issues that may arise, all framed in an accessible manner suitable for high school students and others seeking clarity on this topic.

What is Tip Pooling?

Tip pooling refers to a practice where tips left by customers are collected into a common fund and then divided among employees. This system aims to ensure that all tipped employees, such as waitstaff, bartenders, and bussers, share in the gratuities, recognizing the collective effort in providing service.

The Legal Perspective on Tip Pooling

The legality of tip pooling often comes into question. It might seem unfair at first—why should your tips be the same as those of a coworker who might not put in as much effort? According to wage and hour laws, tip pooling is indeed legal, but there are specific rules to ensure fair and legal distribution of tips.

For example, tip pools must benefit those employees who customarily and regularly receive tips. This means that the collected tips should not be distributed to employees who do not typically receive tips directly from customers, such as cooks or dishwashers. Furthermore, tipped employees must receive at least the minimum wage for tipped workers when their wages and pooled tips are combined. In states like Arizona, this means earning at least $10 an hour, including tips.

Employers are prohibited from keeping tips for themselves or using them for any purposes other than compensating tipped employees. If an employer retains tips or distributes them to non-tipped staff, this could constitute a violation of wage laws.

Addressing Issues with Tip Pooling

Navigating tip pooling can be complex, especially when issues arise, such as coworkers not contributing their fair share to the pool or management mishandling the distribution. If you encounter problems, the first step is to report your concerns to your employer promptly. A responsible manager should investigate the issue and take appropriate actions to resolve it.

However, if your employer is the source of the problem, such as violating minimum wage laws or improperly handling tip pools, you might need to take additional steps. Initially, try discussing your concerns directly with your employer. If this doesn’t lead to resolution, consulting with an employment law attorney might be your next course of action. An attorney specializing in employment law in your area, such as Arizona, can assess your situation, inform you of your rights, and guide you through the process of seeking any owed compensation or back pay.

Real-world Examples

Consider a scenario where a waiter at a busy restaurant consistently receives high tips due to exceptional service. However, due to a tip pooling system, these tips are shared among all tipped employees, including those whose service may not be at the same level. While this might seem unfair, it’s important to remember the intent behind tip pooling—to ensure equitable compensation for all staff involved in the service process.

In another example, if a bartender notices that a significant portion of tips is being withheld by management or distributed to employees who do not typically receive tips (like kitchen staff), this would be against the law. The bartender has the right to raise this issue with management and, if necessary, seek legal assistance to ensure fair treatment.


Tip pooling is a legally recognized practice designed to fairly distribute tips among those employees involved in providing service. While it may present challenges, understanding your rights and the appropriate steps to address concerns can empower you as a tipped employee. If you find yourself facing issues with tip pooling or wage violations, remember that resources are available, including talking to your employer or consulting with a legal expert, to ensure you are compensated fairly for your hard work.

J. Horowitz
J. Horowitz

J. Horowitz leverages over two decades of experience as a seasoned employment law attorney in Arizona to offer insightful freelance writing on the same subject. After a successful career advocating for fairness and justice in the workplace, J. now dedicates his expertise to writing comprehensive articles, blog posts, and thought leadership pieces that illuminate the complexities of employment law.