10 Tip Pools

Tip pools let organizations collect a percentage of tips from tipped employees for distribution to non-tipped employees. For example, you can set up a tip pool to collect a portion of tips from servers and distribute the money to hosts. Follow federal and state regulations for tip pools because percentages for non-tipped employees may vary. Use tip periods to define time periods in a work day for tip pool calculation. For example, if a store regularly changes staff between day and evening shifts, you can set a day and night tip period so the two periods have separate collection and distribution pools.

Tip pools have many configuration options to meet the needs of different organizational systems. An organization may have multiple tip pool profiles that can be assigned to different locations. It is also possible to use one tip pool profile for several locations.

You can configure the collection of tip pool money in one of two ways:

• Manual: Each day, the manager determines how much to collect from tipped staff and then enters that amount into the Manual Collection module.

• Automatic: Labor Management is configured to calculate the correct amount to collect and then the manager follows the collection calculations and collects the tips.

• Manual Tip Pools
  
• Automatic Tip Pools
  

Manual Tip Pools

Set up tip pools for manual collection so an authorized employee, such as a restaurant manager, can enter the amount to collect for the day. The tip pool profile defines the percentages for distributing tips. The system then determines an hourly wage for each job.

For example, you have three jobs that receive tip pool distributions. You configure distributions as follows:

• Bus Boys: 20 percent

• Hosts: 30 percent

• Bartenders: 50 percent

If you entered a tip pool amount of $75.00 for the day, the amount per job based on the percentages would be:

• Bus Boys: $15.00

• Hosts: $22.50

• Bartenders: $37.50

The system calculates the hourly tip rate based on the total hours worked for the job:

• If bus boys worked 30 hours that day, the hourly rate of tips is $0.50.

• If hosts worked 25 hours, the hourly rate of tips is $0.90.

• If bartenders worked 10 hours, the hourly rate of tips is $3.75.

The system applies the hourly rates to each employee’s hours worked. A bartender who worked a 5-hour shift earns $18.75 in tips.

If one or more jobs do not have hours logged for the specific business day or tip period, the tip pool is distributed proportionally among the jobs that had hours logged. For example, if the bar is closed for a day, the system maintains the proportions and distributes the tip pool as 40 percent to bus boys and 60 percent to hosts.

• Configuring Manual Tip Pooling
  
• Entering a Manual Tip Pool Amount
  

Configuring Manual Tip Pooling

1. In Reporting and Analytics, click Labor, click Payroll Administration, click Admin, and then click Tip Pool Profile.
2. Click Add, or select a tip pool profile and then click Edit.
3. In the Distribution Method drop-down list, select whether to distribute from the tip pool by cash or directly in a paycheck.

   • If you select Cash, then Labor Management calculates how tips are divided amongst the staff and then the manager is responsible for physically distributing the cash tips to employees. The distribution amount will not be recalculated if changes are made to time records for previous days.

   • If you select Paycheck, then Labor Management calculates how tips are divided amongst the staff and the tips are included in their paycheck or another non-cash payment. The distribution amount will be recalculated if changes are made to any time records in the current pay period.

   Note:

   You can eliminate the need to add tips to time cards individually by using the Paycheck option in conjunction with the Post Indirect Tip to Time Card setting.
4. Select Post Indirect Tip To Timecard to post the amount distributed through the tip pool as an indirect tip to employee timecards.
5. To implement tip periods:
   1. Select Enable Tip Period.
   2. Under Tip Period Configuration, enable and set a duration in hours for up to four tip periods. The durations must total 24 hours.
6. Select Manual Collection.
7. For each job that accepts indirect tips, enter the Percentage of the tip pool that each job receives.
8. Use the Effective From date editor to select the first day in which the profile becomes active. You can use the Effective To date editor to select a day in which the profile becomes inactive.
9. Click Save.

Entering a Manual Tip Pool Amount

Perform these steps when using a tip pool profile configured for manual collection. Amounts entered in this module may only be edited if the distribution method is Paycheck and the pay period is open.

Cash distribution may be edited on the same day the cash totals were entered, as long as the End of Day has not run yet. When an entry is changed, the system will recalculate the distribution and save it to the employees’ records.

1. In Reporting and Analytics, click Labor, click Payroll Administration, and then click Manual Tip Pool Allocation.
2. Select the location, and then click Edit.
3. For each day and tip period, enter the tip pool amount to be distributed based on the tip pool profile, and then click Save.

Automatic Tip Pools

You can configure tip pools for automatic collection so the system calculates the amount that the manager should collect for the day based on percentage of tip and type of sales total.

For example, you have three jobs that accept indirect tips. You configure the tip pool as follows:

• Bus Boys: 5 percent of Net Sales

• Hosts: 3 percent of Revenue Center Net Sales

• Bartenders: 8 percent of Beer, Wine, and Liquor Gross Sales

The system then calculates the distributed amount based on the respective sales totals.

• Configuring Automatic Tip Pooling
  

Configuring Automatic Tip Pooling

1. In Reporting and Analytics, click Labor, click Payroll Administration, click Admin, and then click Tip Pool Profile.
2. Click Add, or select a tip pool profile and then click Edit.
3. Enter a name and a description for the tip pool profile.
4. In the Distribution Method drop-down list, select whether to distribute from the tip pool by cash or directly in a paycheck.
5. Select Post Indirect Tip To Timecard to post the amount distributed through the tip pool as an indirect tip to employee timecards.
6. If the tip pool profile must account for work periods when tip pools are not collected:
   1. Select Enable Tip Period.
   2. Under Tip Period Configuration, enable and set a duration in hours for up to four tip periods. The durations must total 24 hours.
7. Select Automatic Collection.
8. For each job that accepts indirect tips:
   1. In the Sales Method drop-down list, select the total sales value from which to calculate the percentage.
   2. Enter the Percentage of the total sales value that the job receives.
   3. Select the revenue center, major item group, or order type to which the selected total sales value applies.
9. Use the Effective From date editor to select the first day in which the profile becomes active. You can use the Effective To date editor to select a day in which the profile becomes inactive.
10. Click Save.