KZA Refresher On Tip Pools

Many Nevada employers use tip pools as a way to equalize wages and facilitate teamwork. While tip pools are lawful, they can create liability for an employer if they are improperly structured or managed. We have set forth below a refresher of tip pool rules for Nevada employers.

Basic Tip Rules

• In Nevada, it is unlawful to use tips as a credit toward minimum wage.
• Tips are the property of the employee, and an employer cannot take all or part of any tips for any purpose.
• A compulsory charge for service imposed on a customer, such as 15 percent of the amount of a bill, is not a tip. It is the employer’s property. 
• An employer should fully distribute tips on the regular payday of the workweek in which the tips were collected.

Tip Pools Ok For Non-supervisors

• Nonsupervisory employees can form tip pools.
• Employers can require nonsupervisory employees to participate in a tip pool as a condition of employment.
• Employers can specify who participates in the tip pool and can include those nonsupervisory employees who do not normally receive tips (i.e., mixed tip pools are lawful).

No Tip Pools For Supervisors & Managers

• Supervisors and managers cannot participate in a tip pool and cannot receive tips from a tip pool.
• Supervisors and managers cannot have their own tip pool.
• Supervisors and managers can only keep tips that they receive directly from customers based on service that the supervisor or manager directly and solely provided to the customer.
• The definition of supervisor or manager for these rules is: (1) an employee whose primary duty is managing a department or subdivision of the company, who customarily and regularly directs the work of at least two full-time employees, and who has the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring or firing are given particular weight; or (2) an individual who owns at least a 20 percent equity interest in the company in which they are employed and who is actively engaged in its management.

If you have questions about tips or tip pools, please contact a KZA attorney.

KZA Employer Report articles are for general information only; they are not intended and should not be construed to be legal advice. Reading or replying to such articles does not establish an attorney-client relationship. In addition, because the subject matters and applicable laws discussed in Employer Report articles are often in a state of change and not always applicable to every type of business entity or organization, readers should consult with counsel before making decisions based on the same.