Tip Pooling/Handling

Tips not connected to a delivery order are considered insider tips. Insider tips are increasing and provide franchisees with a new opportunity to reward inside employees when tips are pooled and allocated. However, this opportunity can create increased risks if handled improperly. There are multiple ways to pool tips and specific laws that impact who receives tips.

If you are not planning to pool tips, confirm that all car-side delivery orders are assigned to a specific employee. There are legal considerations if a manager or supervisor is assigned the order and receives a tip. Also, you should turn off tipping for carry-out or drive-thru orders. This will prevent a store from receiving tips that are not assigned to a specific team member.

If you are considering pooling tips, there are two parts to the decision: 1) what tips are included? and 2) which employees will participate?

Pooled tips come from customer orders that are not assigned to an individual employee.

The following are two ways to increase the size of the tip pool:

  1. Assign car-side orders to a predetermined pool
  2. Allow customers to tip drive-thru and carry-out orders and assign the drawer

Once the tip pool is established, you must determine which employees will participate. The employees participating should be clearly defined based on their positions in Pulse and each position should have defined responsibilities documented. The goal is to exclude employees with manager or supervisor responsibilities.

Through HORNE’s payroll services, we have a tool that allocates tips to the appropriate employees each pay period. The employees are paid an allocated portion of tips based on hours worked during the period. Allowing Inside staff to receive tips can be a useful recruiting tool and may reduce turnover.

HORNE recommends a clear policy to mitigate the risk of mishandling insider tips. Regarding the laws, it is important for franchisees to receive advice from legal or human resource professionals regarding federal, state, and local laws.

Reach out to your Relationship Manager to learn more about ways to handle insider tips

READ MORE OF OUR LATEST INSIGHTS

SEE AROUND CORNERS.
INDUSTRY EXPERTISE DELIVERED.

More Insights

HORNE donates $60,000 to charities in Mississippi

Two non-profits in Mississippi soon will receive support for their community efforts thanks to HORNE and the HORNE Community Foundation. HORNE team...

READ MORE

Meeting your customers’ needs through digital transformation

The pandemic has played a big part in supercharging the digital transformation trend in financial services. In 2020, online banking usage increased...

READ MORE

Auto dealers must comply with GLBA by December 9

Automobile dealers don’t just sell vehicles, they do credit checks and issue loans as well. Because of this, dealers store important customer data,...

READ MORE

HORNE donates $60,000 to charities in Louisiana and Arkansas

Two non-profits in New Orleans and Little Rock, Arkansas, soon will receive support for their community efforts thanks to HORNE and the HORNE...

READ MORE

MDOR issues guidance on income tax treatment of ERC

The Mississippi Department of Revenue communicated the following information regarding Employee Retention Credits to members of the Mississippi...

READ MORE

HORNE donates $60,000 to charities in North and South Carolina

Two non-profits soon will receive support for their community efforts thanks to HORNE and the HORNE Community Foundation. HORNE team members voted...

READ MORE

Talk to an expert today.