For restaurateurs, tip pooling and tip credits are a source of confusion and an area of vulnerability. Mistakes about allocating tips are common, partly because traditionally tipped employees take on work that is not eligible for tipping and partly because tipped employees may sometimes have to share their tips with other, nontipped members of the “team.” Mistakes like these are also costly for employers because employees are entitled to liquidated or double damages when they are not properly paid.
For employees in the restaurant industry, sharing tips is a source of frustration. Although front-of-the-house employees can earn a significant amount of money through tipping, the employees responsible for the food served by these tipped employees are not eligible for this additional compensation and must rely on the wage set by their employer.