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Home » Recent News » Tip Pooling Leads to Worker Exploitation

Tip Pooling Leads to Worker Exploitation


Tip pooling is when employers require, or strongly suggest, that tipped workers put a portion of their tips into a common pool. In the past, such practices allowed employers to take control over employee tips and retain part of the money for themselves or distribute it to other employees. In 2011, under the Obama administration, the Department of Labor (DOL) passed a rule explicitly banning service industry managers from pooling and pocketing a percentage of their workers’ tips.

In December, the DOL announced its intention to reverse the rule in order to help “decrease the wage disparities between tipped and nontipped workers.” However, the rule change they propose has no requirement that employers distribute the pooled tips to bus boys and dishwashers. Employers would be free to pocket those tips as they have in the past.

“By allowing employers to take control of their employees’ tips, this regulation would push a majority-women workforce … further into financial instability, poverty, and vulnerability to harassment and assault,” says Saru Jayaraman of the union-backed Restaurant Opportunities Centers United. The Economic Policy Institute (EPI) says allowing tip sharing would be disastrous for workers, allowing employers to legally pocket $5.8 billion in tips (16% of the employee’s tipped earnings).


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