The standard way for tips to be handled in a bar or restaurant setting is simply for the employee to keep the tips that are given directly to them. In fact, these establishments are allowed to pay their employees less than minimum wage if and only if the tips then bring their wages up to an average that is higher than the minimum wage. If not, the employer has to pay more to make up the difference. This ensures that even tipped employees are still paid at least the minimum wage in the state.
Another tactic for tips, however, is known as tip pooling. The same minimum wage requirements apply, but employees do not directly take their own tips. Instead, all tips go into one central fund, known as a pool. This is then divided evenly between all who earn tips and contribute to it. Is this allowed in Kentucky?
Tip pooling, when made mandatory by an employer, is actually illegal in Kentucky. Employees cannot be compelled to share their tips in this fashion. Most states do allow it and Kentucky is an outlier in this regard, so it’s important for workers who may have moved here from another state to know how that changes their rights. This doesn’t mean workers can’t share their tips if they choose to. It just means the employer cannot force them to use a pool instead of taking home exactly what they get during the shift.
If you feel like your employer has violated this law in some regard, make sure you are well aware of the legal options you have.