Tip Pooling and Distribution

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RPOWER now supports tip pooling. This article will discuss the setup and implementation of tip pooling and distribution.

Contents


  • Note: Currently, RPOWER can automatically manage and distribute tip pools for Indirectly tipped employees only. Indirectly tipped employees include bussers, barbacks, food runners and hostesses. Servers are considered Directly tipped employees. Bartenders are considered to be both direct and indirect, as they receive tips directly from customers, and are also indirectly tipped by servers. We are extremely interested in hearing examples of Direct tip pooling implementation in actual restaurants. Specifically, how tips are prorated to account for split shifts, short shifts, double shifts; cocktail server vs food server; service bartender vs regular bartender, etc.

RPOWER version 11011701 or higher is required to implement tip pooling. The use of RPOWER's time clock function is also required. RPOWER also requires that all charge tips and gratuities be retained, that is, held and disbursed through payroll.

It is important to understand that, for indirect pool calculations, charge tips, gratuities and declared cash tips from directly tipped employees are ignored. This is because we must assume that any cash tip declaration made by these employees is inaccurate, thereby making any total tip calculation inaccurate as well. These amounts are, of course, still used for tip reporting purposes.

Gather Facts

Step one in setting up tip pooling is to gather several important pieces of information:

  • 1. What was the charge tip percentage at the restaurant over some significant, recent sampling period? (three months, six months, last year) An easy source of this information is the last filed IRS form 8027, which includes total charged tips and total charged receipts, the latter including only those charges that included tips. This percentage will be used to calculate bartender and server tips using total allocable sales.
  • 2. What percentage of total tips is a server required to contribute to the bus pool?
  • 3. What percentage of total tips is a server required to contribute to the bar pool? Or, what percentage of liquor sales is a server required to contribute to the bar pool?
  • 4. What percentage of total tips is a bartender required to contribute to a barback?

Corresponding percentages should be collected for any other indirectly tipped employees: runners, hostesses, etc.

Calculate Distribution Percentages

1. Is used to estimate the total tips received by each bartender and server. Remember, because we must deem declared cash tips inaccurate, we must estimate total tips received by these employee based on sales. Twenty percent may be a good starting point for this number, with the historical charge tip percentage nudging it up or down, accordingly.

2. Is used to calculate the total due by a server to the bus pool. If, for example, we use 20% of sales (from 1., above) as total server tips, and a requirement that of 15% total tips be contributed to the bus pool (from 2., above), we may calculate the contribution as 3% of total sales (20% x 15% = 3%).

3. Is used to calculate the total due by a server to the bar pool. Again using 20% of sales as total tips and a requirement that 5% of that be contributed to the bar pool (from 3., above) we arrive at 1% of total sales be contributed (20% x 5% = 1%). Or, if 10% of liquor sales must be contributed to the bar, then that will be the number used.

  • Important note: This is where things get a little tricky, but only for those restaurants using barbacks. RPOWER's implementation of tip pooling specifies that the server's contribution to the barback not pass through the bartender, but instead be contributed directly to the barback pool. While in the previous two examples a percentage of a percentage was calculated, in this case a percentage of a percentage of a percentage will be used. Assume again that the server collects 20% of total sales as tips, and that the bar contribution is otherwise 5% of that. In addition, using 4. from above, assume that bartenders contribute 15% of their tips to the barback. We can then calculate that a server will contribute .15% of total sales to the barback pool (20% x 5% x 15% = .15%) and only .85% to the bar pool (as opposed to the 1% calculated in 3., above) (20% x 5% x 85% = .85%). Or, if a bartender would otherwise receive 10% of liquor sales from the server, then the server will contribute 1.5% of liquor sales directly to the barback (10% x 15% = 1.5%) and only 8.5% of liquor sales to the bar pool (10% x 85% = 8.5%).

4. In the note above, the server's contribution to the barback was calculated, now, using 4., from above, the bartender's contribution to the barback pool is calculated. Assuming that the bartender receives 20% of total sales as tips, and assuming again that a bartender is required to contribute 15% of those tips to the barback pool, then 3% of total sales must be contributed (20% x 15% = 3%).

  • Note: The distribution of indirect tip pools is prorated using minutes worked during that business day for each indirect employee. E.g., if Bus1 works eight hours today and Bus2 works four hours, then Bus1 will receive 2/3 (480 minutes / 720 minutes = 2/3) of the bus pool, while Bus2 will receive 1/3 (240 minutes / 720 minutes = 1/3) of the pool.

RPOWER Setup

Retain tips

Enable Retained Tips

Navigate to Manager, System Setup, System Information and check the box Retain Tips (don't pay out cash).

Confirm Allocation

Navigate to Manager, System Setup, Menu Sales Categories, and for each category confirm the status of the check box OK tip allocation?. Check the box, or not, as appropriate.

  • Important: Every Menu Sales Category must be carefully reviewed to ensure that it is, or is not, contributing to Server and Bartender sales totals, as these totals are the basis of the entire tip pool system.
Tip Pool Names

Define Tip Pool Names

Navigate to Manager, System Setup, Job Setup and choose a job, it doesn't matter which one.

Click Tip Pool Names.

Beginning at Pool 1, label the tip pools appropriately and Save.

Job and Tip Pool Setup

Job Setup - Server

Navigate to Manager, System Setup, Job Setup and choose the job Server. A typical job setup for a server is shown at right.

The important fields for pooling consideration are:

Pay type: H Hourly

Allocate tips?: Y Yes (Important!)

Force tip entry?: Doesn't matter. If Allocate Tips, above, is set to Yes, system will always request tip entry.

Define Tip Pool Percentages - Server

Click Tip Pool %'s

There are eight tip pool slots. Tip pools are either defined groups or free slots for targeted tipping.

Each of the eight pools can be thought of as a "jar." Group jars, such as "Bar", "Barback, "Busser" and "Host" are shared among employees working those jobs. Each employee also has his or her own "jar." The rest of the eight tip pool slots are availble to target contributions to these individual jars.

  • Note: Targeted tipping may or may not be used when tip pooling, each restaurant will probably be different. When checked, it will allow the employee to contribute tips, over and above the pooled amounts, to individuals. In the example above, pools four through eight have Targeted Employee checked (which automatically checks Manual Entry), allowing servers up to five individual contributions.

A job can either distribute to (put money into) or be a member of (take money out of) each pool.

Checking the Member of (get from)? option for a pool in a job clears and disables all other options. It is only necessary to check the Member of option for group pools — targeted tips will always go to the targeted employee regardless of pool membership.

In the example above, tip pool percentages contributed BY servers are defined. The percentages calculated in Calculate Distribution Percentages, above, are used to populate the grid. Note that percentages are not supplied for non-allocable departments, although even if they were, no calculation would be made.

Click Save. Click Save again.

Job Setup - Bartender

If necessary, navigate to Manager, System Setup, Job Setup and choose the job Bartender. A typical job setup for a bartender is shown at right.

The important fields for pooling consideration are:

Pay type: H Hourly

Allocate tips?: Y Yes (Important!)

Force tip entry?: Doesn't matter. If Allocate Tips, above, is set to Yes, system will always request tip entry.

Define Tip Pool Percentages - Bartender

Click Tip Pool %'s

Note that Member of (get from) is checked AND that the tip pooling percentages calculated in Calculate Distribution Percentage, above, are used for the Barback entries.

Also note that Manual Entry has been checked for the barback pool. While the calculated contribution will be displayed to the bartender, he or she will be prompted to enter a contribution to the pool, allowing an override of the calculation, up or down..

Finally note, just to show a more typical entry, no Targetted Employees have been checked.

Job Setup - Indirect Employees

If necessary, navigate to Manager, System Setup, Job Setup and choose an indirectly tipped employee. A typical job setup for an indierctly tipped employee is shown at right.

The important fields for pooling consideration are:

Pay type: H Hourly

Allocate tips?: I Indirect (Indirectly tipped employees will appear on the Select... lists for targeted contributions).

Force tip entry?: Unchecked (In most cases indirectly tipped employees have no additional tips to declare).

Define Tip Pool Percentages - Indirect Employees

Click Tip Pool %'s

An example of pool contributions for an indirect employee, a busser, is shown at right.

The only entry made for an indirectly tipped employee is to select the corresponding pool as Member of (get from)?.

All other indirectly tipped employees should be setup in the same way, with their corresponding member pool selected.

RPOWER Operations

Tip Declaration - Server

On time out, servers will be prompted to enter their cash tips.

RPOWER then presents a tip distribution panel for review.

The cash tip declaration may be edited by touching Enter (N/A) or more.

Tip pool contributions are displayed, in this example to Bar, Barback and Bus, but may not be edited (Manual entry not selected in Job Setup).

Up to five targetted contributions may be made (in this example) by touching any of the Select... buttons.

The first panel displayed lists all direct and indirect employees still timed in.

  • Note: Employees marked as Display as server in their job setup are shown in blue, drivers are displayed in aqua, all other tippable employees are displayed in brown.

The server may choose an operator to contribute additional tips from this list, or touch Show Shift...

...Which lists all tippable employees that had been or still are punched in during the same timeframe as the server (last six hours).

The server may choose an operator to contribute additional tips from this list, or touch Show All Today...

...Which list all tippable employees that have been punched in at any time today.

The server may choose an operator to contribute additional tips from this list, or touch Show List...

...Which lists all employees in the system.

  • Note: Not all employees may be eligible for targetted tips. They will be excluded if a current time clock record is unavailable, or they may be excluded totally by job setup.

In the example shown, the server has elected to target Bus1 and Bar1 for addional $5.00 tips. Note that these are not additional tips to the bus and bar pools, but are direct, additional contributions to these two individuals. These targetted contributions may be edited by touching their respective boxes,

The server may touch Cancel to exit without saving, or touch Save and Contnue to finalize tipping and punch out.

Tip Chit - Server

Assumning the option to do so is enabled, a time clock chit is printed for the server's records.

Tip Declaration - Bartender

On time out, bartenders will be prompted to enter their cash tips.

Unlike the previous example, wherein a server was not permitted to edit tips to their respective pools, bartenders are prompted for their contribution to the barback pool (This because Manual Entry was selected in Pool Contributions for barbacks). The calculated contribution is displayed, and may be accepted by touching OK, or, the suggested amount may be overridden, either larger or smaller (at least currently).

Cash tips and the barback contribution may be edited by touching their respective boxes.

The bartender may touch Cancel to exit without saving, or touch Save and Contnue to finalize tipping and punch out.

Tip Chit - Bartender

Assumning the option to do so is enabled, a time clock chit is printed for the bartender's records.

Tip Declaration - Indirect Employee

Under almost all circumstances, indirectly tipped employees will have no cash tips to declare, so none will be requested, they will simply punch out.

Tip Chit - Indirect Employee

Edit Time Clock Records

To edit tip pool contributions, both contributed and received, navigate to Manager, Employee Setup, select the employee, Time Clock Edit and select the time clock record to be edited.

Touch Tips

Any of the tip fields may then be edited.

Exceptions

It is possible that on any given day a directly tipped employee might have no charge tips, or insufficient charge tips to cover his or her tip pool obligations. In that case, RPOWER permits the employees retained tips to go negative. In these cases, RPOWER will not permit targetted tipping, nor will it allow any Manual Entry that would increase a tip pool contribution above its calculated value. It is assumed that over the course of the payroll period sufficient charge tips will be retained to wash the negative amount.

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