Avoiding the Deep End of the Tip Pool: Using Transactional Data to Track Tips

Tracking tips can be a major stressor to restaurant operators. Luckily, this IRS-induced pressure can be a telltale sign of a business that’s moving in the right direction ... especially when you are seeing a correlation between “big” tips and net new customers. But even the best and most honest employees may not be adept at tracking tips, so it’s more critical than ever to have an honest view of gratuity in your restaurant operation.

And these days, tipping within an individual location or across an entire chain is becoming a more heavily scrutinized practice. Over the past years, there’s been countless examples of class-action lawsuits where servers are filing for compensatory and punitive damages due to “mandatory” tip pools within their workplace. And just this past July, the Department of Labor set forth a plan to rescind the 2011 tip pooling regulation, which could be a boon for the service industry but potentially still lead to legal woes.

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