What is Tip Pooling
Tip pooling is the practice of collecting all tips for the day and dividing them among working employees according to a formula. The formula can be as simple as an even division among all workers. Another popular formula is to weigh the tips by position in the restaurant according to a point system.Â
There are laws regulating tip pooling, which vary by state. Legally, tip pooling is distinct from tip sharing. Tip sharing is a voluntary arrangement created by employees for the division of tips, while tip pooling is a company policy. Tip pooling can be extended to include non-tipped employees if tipped employees are paid the full minimum wage.
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Purpose of Tip Pooling Calculator
A tip pooling calculator (or tip splitting calculator) allows you to consistently apply the same formula to your tip division, increasing consistency and fairness while reducing effort. The exact formula applied by the calculator can be customized to your needs. You can choose to use a point formula that assigns more tips to servers and less to bussers (for example, imagine servers get 20 points while bussers get 10) or you can divide tips evenly among workers. As a manager, using a tip calculator saves you time and creates a repeatable process you can easily explain to employees who want to understand how they get tipped.
Benefits of Using a Tip Pooling Calculator
Using a tip share calculator creates a simple procedure that you’ll follow every time. You input the data, and the calculator does the rest. This saves time and puts an end to manual number crunching. Another benefit of a tip calculator is its accuracy: tips are calculated according to the same formula each time, based on clear data. Your employees will appreciate the fairness of this method. And if they ask how tips are divided, you’ll have a tool to show them, increasing transparency. Finally, using a tip calculator reduces your compliance risks, as the calculator is designed to meet the legal requirements around tip pooling.Â
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Tips for Effective Tip Pooling Management
Successful tip pooling requires clear communication with employees on how the process works and why it is designed that way. The more transparent you can be with staff, the more trust they’ll have in the process. Trust leads to employee buy-in, meaning you’ll get less objections to your tip distribution calculator. It’s important to periodically examine your tip pooling process and evaluate whether it’s achieving the outcomes you designed it for. Are your employees feeling valued? Are the points being fairly allocated? Ask for feedback from your staff, and if it’s relevant, try to take it into account. A solid tip pooling procedure is a valuable business asset, one that pays dividends in a happy and hard working staff.
RELATED: How to Record Tips in Accounting
