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Restaurants Can't Make Servers Share Tips With Kitchen Staff, Says Court

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Tip-pooling is used to even out the pay disparity between servers and cooks

Robert S. Donovan/Flickr

As restaurants across the country debate whether to oust tipping, things are getting a little more complicated for restaurateurs in several U.S. states.

Earlier this week, California's 9th Circuit Court of Appeals upheld a previous 2011 ruling that bans restaurants from making servers and bartenders share their tips with back of the house employees, reports the LA Times. Such tip-pooling practices are sometimes used to even out the disparity of pay between the front of house staff, who typically earn much higher wages due to tips, and cooks and dishwashers, who only take home a flat hourly rate.

The Times notes that this probably won't have a huge impact on the current state of things in California, as most of the state's restaurants do not participate in this practice since it's "a legal gray area." But the ruling also applies to six other states where service employees earn the full state minimum, as opposed to the lower tipped minimum, in addition to gratuities — namely Alaska, Minnesota, Montana, Nevada, Oregon and Washington. (The lack of a separate, lower minimum wage for tipped workers in those states can further increase the disparity between front of the house and back of the house pay.)

The ruling was spurred by lawsuits from workers in several states, including dealers at Las Vegas's Wynn casino who said management "was taking their tips to share with other workers."

But the service industry isn't taking this one lying down: According to Nation's Restaurant News, some industry groups such as the Washington Restaurant Association are planning to appeal the court's decision, while warning its members that they may "face some legal risk if they did not change the tip pool policies" currently in place.

The situation adds fuel to the current debate that's raging over how businesses should pay their employees in the face of rising minimum wages and healthcare costs. Restaurateur Danny Meyer is famously navigating those choppy waters by ousting tipping at his New York restaurants in favor of higher menu prices (and higher wages for both front and back of house employees).

Others, such as The Radler in Chicago and LA's Otium, are implementing across-the-board service charges; both systems help to even out the disparity between pay rates for servers and cooks. And some restaurants are finding other creative solutions to that problem: LA restaurant Alimento added an additional tipping line to its receipts that allows customers to leave a separate tip for kitchen staff.