Some Tips on Tip Pooling and Tips Sharing

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Minnesota Employment Law on Tip Pooling and Tip Sharing

It is hard to go to a restaurant, coffee shop or bar without seeing a tip jar. For anyone who has saved their spare change, you know how quickly those nickels and dimes (and even dollar bills) can add up to signficant money. For employees in these establishments, a tip jar can be an easy and non-confrontational way to increase their income. But what about Minnesota state employment law? Are they violated when businesses put out tip jars and when the employees split the tips?

Minnesota law states that pooling or sharing of gratuities “may not be a condition of employment.” Minnesota courts have stated that tips belong to the employee who earned it and for this reason, he or she can’t be forced to share the money. Thus, an employer cannot require an employee who normally receives tips directly from customers (a “direct employee,” according to the law) to share his or her tips with other employees. Federal law, and some other states, do allow tip sharing to be mandatory. But Minnesota is different.

So going back to the tip jar. The first question would be whether baristas at coffee shops are those type of employees who normally receive tips. The answer would likely be yes. So in this case, the next issue is who has decided to start a tip jar. If it was the employer and if the employer is requiring it, that policy would be in violation of Minnesota law.

It has to be up to the employees to decide if and how they will share the tips. It would be difficult (but not impossible) to divide up the tips according to who earned them if an employee decided not to participate in the tip sharing. It would simply require vigilance to remove from the jar that person’s tip immediately after a customer deposited it in the jar. It is important to remember that each employee has the right to decide whether to participate or not and his or her refusal cannot be a reason to terminate employment.

Violations of this Minnesota law can lead to investigations by the Department of Labor and fines.

Another issue could be whether the employee who refuses is harasses by other employees and coerced to participate. Allowing such behavior to take place could lead to other liability for the employer. Click here to read more.



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