Restaurant Tip Policy

I. Introduction

This Tip Policy outlines the procedures for the collection, distribution, and management of tips at our restaurant. Tips are an important part of our employees' compensation, and we are committed to ensuring they are distributed fairly and transparently. This policy aims to provide clarity and fairness for all eligible staff members.

II. Eligibility

All employees in customer-facing positions are eligible to receive tips. This includes servers, bartenders, bussers, and host staff. Back-of-house staff, such as kitchen employees, are not eligible to receive tips unless otherwise specified.

III. Tip Collection and Distribution

A. Collection

Tips may be collected through both cash and credit card payments. Cash tips are usually handed directly to employees by customers, while credit card tips are processed through the restaurant's point-of-sale system.

B. Distribution

The methods for distributing tips include:

Individual Tips: Tips received directly by employees (e.g., cash tips left on tables) are retained by the individual.
Tip Pooling: Tips collected through credit card transactions are pooled and distributed among eligible employees based on a predetermined formula.

C. Frequency

Tips are distributed on a weekly basis, aligning with the payroll cycle. This ensures that employees receive their tips in a timely and consistent manner.

IV. Tip Pooling and Sharing

A. Definition and Purpose

Tip pooling is a system where tips collected from customers are combined into a pool and then distributed among eligible employees. The purpose of tip pooling is to ensure fair distribution among all employees who contribute to the overall guest experience.

B. Positions Included

The following positions are included in the tip pool:

Servers
Bartenders
Bussers
Host Staff

C. Distribution Formula

The distribution of tips within the pool is based on the following percentage breakdown:

Servers: 60%
Bartenders: 20%
Bussers: 15%
Host Staff: 5%

V. Tip Reporting and Recording

A. Procedures

Employees are required to report all tips received at the end of each shift. This includes both cash and credit card tips. Accurate reporting ensures that all tips are properly recorded and distributed.

B. Payroll

Tips are recorded in the payroll system to ensure accurate accounting and reporting. This process ensures that employees receive their fair share of tips and that all tip income is documented for tax purposes.

C. Compliance

We adhere to all federal, state, and local laws regarding the reporting and taxation of tips. Employees are responsible for reporting their tips honestly and accurately, and we ensure compliance with all applicable tax regulations.

VI. Service Charges

A. Tips and Service Charge

Service charges added to bills are distinct from tips. While tips are voluntary payments made by customers directly to the service staff, service charges are mandatory fees added to the bill by the restaurant. These charges are not considered tips and are distributed differently.

B. Distribution

Service charges are allocated in a manner that supports both staff compensation and operational costs. A portion of the service charge is distributed among the employees who provided the service, while the remaining portion is retained by the restaurant to cover expenses such as administrative costs and benefits.

VII. Deductions and Withholding

A. Legal Deductions

In accordance with the law, certain deductions may be made from tips under specific circumstances, such as for broken items or customer walkouts. These deductions are clearly communicated to employees and are conducted in compliance with legal requirements.

B. Withholding Taxes

All tips are subject to withholding taxes as required by federal, state, and local laws. Tips are included in the payroll system to ensure accurate tax withholding. Employees are informed about their responsibility to report all received tips for tax purposes.

VIII. Non-Discrimination

We are committed to ensuring that tips are distributed without discrimination based on race, gender, age, or any other protected characteristic. Our tip distribution practices are designed to be fair and equitable, promoting a positive and inclusive work environment. Any complaints or disputes regarding tip distribution will be handled promptly and fairly.

IX. Training and Communication

All employees will receive comprehensive training on this Tip Policy during their orientation. This training includes detailed explanations of tip collection, distribution, reporting, and compliance procedures. Regular updates and communications will be provided to ensure all employees are informed about any changes to the policy and understand their roles and responsibilities.

X. Policy Changes

We reserve the right to amend this Tip Policy at any time to reflect changes in business practices or legal requirements. Any changes to the policy will be communicated to employees through written notices and staff meetings, ensuring that all team members are aware of and understand the updates.