Thoughts on Tip Sharing Policy

Ever since the Department of Labor gave the go-ahead for tip sharing between back-of-house and front-of-house employees, there’s been a never-ending debate around how effective it is and what tip sharing strategies work best for restaurants. Tip sharing, designed to afford tip access to more employees, has critics arguing that restaurateurs take advantage of it to pay themselves, taking tips off their workers.

Tip sharing becomes a contentious issue because employees who physically engage with customers often believe they should earn more. However, there are ways to get around this so employees don’t feel like you’re shortchanging them while still recognizing the efforts of back-of-house employees, allowing more people to benefit from gratuity.

Outline and Reinforce the Consequences

Before you formulate your automatic tip sharing strategy using the tip sharing software of your choosing, ensure you have a word with your local authorities. Talk to your local department of labor office to understand what the minimum wage requirements are so you have a better understanding of your responsibilities during tip allocation. These requirements are also necessary for restaurateurs who practice tip pooling and other forms of tip distribution.

Knowing what the guidelines are, be clear with your employees about how much of the gratuity they’re entitled to, helping your tip management skills.

Cover All Your Bases With Tip Reporting

Another important facet to consider when determining how to fairly distribute tips for tip sharing is rigorous tip reporting. You need to collect tip reports regularly from your employees to comply with Internal Revenue Service (IRS) regulations. By taking this aggressive approach towards tip management, you will have a more accurate understanding of how much tax you need to withhold. You’ll get a complete picture of the total sales that your restaurant has accumulated as well as tips when tax time arrives.

Let Tip Sharing Software Lead the Way

Even if you’re a math whiz, utilizing tip management software instead of manually tracking tips saves you time, making your life easier and decreasing the margin for error. Just like tip pooling software and tip distribution software, tip sharing software allows you to keep tabs on how much employees are making from gratuity and lets you make adjustments where necessary.

After every shift, your employees are expected to disclose all their tips to you from that day’s work. The collected information is put into a report before reaching the desk of management. There are also compliance features that will ensure everything is going the right way. The tip sharing software will do all the calculations for you and ensure all front and back-of-house employees are paid what they deserve. Tip sharing intends to erase favoritism and to recognize work done throughout your food establishment to prepare meals, including kitchen staff.

Encourage Money Talk Regularly in Your Restaurant

It makes sense, doesn’t it? You’re in the restaurant business to make money as well as serve customers. If you’re introducing a new tip sharing strategy, modifying an existing one or transitioning from a tip pooling strategy, you have to be transparent with your employees about how tip distribution will work. Also, stress that no restaurant tip is automatic. Even with tip sharing systems providing more opportunities for more people to pocket tip money, they still have to work as hard as possible to earn their share of the gratuity your restaurant collects.

Encouraging honest dialogue between your management team and employees will make the tip sharing process considerably easier to stomach for everyone involved. You can’t force employees to report their income. However, educating them on why they should do so will facilitate more transparency. The efficacy of your tip sharing software won’t matter if your employees can’t trust you with money. Make them feel like you’re looking out for their best interests at all times.

For all your tip management software needs to help you decipher how to fairly distribute tips, get a demo today and enhance your tip sharing strategies.