Tip Pooling Laws and Your Restaurant

March 27, 2018



You’ve probably heard us talk about changes to Tip Pooling recently. The Federal government repealed the regulation that restricted sharing tips among front of house and back of house employees. There are a few things you need to know if you decide to institute a legal Tip Pool for your establishment.

FIRST

First, you must pay all employees at least the full Colorado minimum wage and not the tipped minimum wage

SECOND

Second, you must not include managers, supervisors, or owners in the tip pool

THIRD

Third, you must post a printed sign in a conspicuous location informing the general public that the restaurant shares tips among the employees.


SIGN DIMENSIONS AND LANGUAGE
Colorado law states that the publicly displayed sign must be 12 x 15 inches, with letters 1/2 inch tall and must use the following language:  ALL PRESENTS, TIPS, OR GRATUITIES GIVEN BY ANY PATRON OF SAID BUSINESS TO AN EMPLOYEE THEREOF ARE NOT THE PROPERTY OF SAID EMPLOYEE BUT BELONG TO THE EMPLOYER. On our sample sign, we added some language to more fully explain the intent behind the sign. This language is optional: AT THIS ESTABLISHMENT WE DISTRIBUTE PRESENTS, TIPS AND GRATUITIES EVENLY AMONG ALL OF THE EMPLOYEES WHO HELP PROVIDE YOU WITH A GREAT DINING EXPERIENCE!

(NOTE: While this language stating that tips BELONG TO THE EMPLOYER conflicts with the Federal law stating tips belong to the employee, the sign is still required under the current Colorado law. We are working with the State of Colorado to get this fixed.)


We recommend that you contact our office if you currently have or are considering a tip pool to help you navigate the legal nuances of how to run it properly. Please contact Nick Hoover at the CRA so he can answer your questions or connect you with legal help if needed.

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