Tipping practices are in constant conversation in the restaurant industry. There have been a number of ways in which restaurant owners have tried to create a more equitable system for employees to earn consistent, fair wages to improve retention. Attempts have been made to eliminate tipping altogether, but many restaurants ended up reverting back to a traditional tipping system.
Tip pooling is another way that restaurants have changed up the system to make it fairer for everyone involved. It also eliminates some of the downsides of tipping like inconsistent wages, an emphasis on “good tables,” and an individual mentality among serving staff.
Restaurants manage tip pools with four types of tools: spreadsheets, point of sale (POS) tip-out features, standalone payout apps, and restaurant HR platforms like 7shifts. 7shifts connects schedules, timesheets, tips, and payroll, so hours worked flow to the tip math automatically. Once your team grows past a handful of tipped roles, tip management software built on your timesheets saves the most manual work.
What is tip pooling?
Tip pooling is a tip distribution method where tips from every bill go into one pool and get split among eligible staff. This includes servers, hosts, bartenders, bussers, or anyone who provides any service that can be tipped by customers like coat check attendants.
It can even extend to the back of the house, so cooks, dishwashers, and porters can get tipped out. With tipping numbers up across the board, now is a good time to think about how you can distribute them to your team more fairly.
In a tip pool, everyone contributes and the total gets split. In a tip share, servers give a set portion of their tips to support roles (see our guide to tip pooling vs. tip sharing).
A traditional tip pooling worksheet from restaurantowner.com
What are the benefits of tip pooling for restaurant teams?
More equitable wages
Tip pooling can help create more equal wages across the board for your entire staff, especially if your tip pool extends to the back of the house. This makes sure that your team is being tipped out equally, regardless of shift or the type of work they’re doing.
Equitable wages are also a great way to stand out in a tough hiring market. Team members feel more valued and stick around longer.
Improved teamwork
A rising tide lifts all ships, so when everyone’s tips are not paid out just for their work, teamwork will be encouraged. This can also help team morale, and have a positive impact on the health of your restaurant.
No “bad tables”
When tips are split fairly, infighting among your team over tables and sections will fall by the wayside. They’ll also be less inclined to neglect side work in favor of taking on tables, making your restaurant run more efficiently.
How tip pool shares are calculated
In 7shifts, you fund a pool with a percentage of total tips or net sales. Then you pick one of three split methods, and hours factor into each:
- By hours worked. Everyone earns the same amount for each hour they worked.
- By role percentages. Each role gets a set share of the pool, like 70% for servers and 30% for bussers.
- By weighted points. Each role earns points per hour, like 1.5 for a bartender and 1 for a busser.
At Miss Kim, Ji Hye Kim asked her staff how to split tips, and they chose an equal hours-based split.
“We didn’t want any hierarchy because… it makes things complicated, difficult to understand. Everybody needs to understand how they’re getting paid… Tips get divided by… number of hours, no different portions depending on the position or the department.”
Cúrate uses a weighted pool to reward selling roles.
“We apply certain weights to positions… We’re able to share tips across the team. But we give a little bit higher tip percentage to those workers who do have the opportunity to sell, to our front-of-house servers and bartenders.”
Example: splitting a $500 tip pool
Take this hours-based example. A $500 pool split across 25 total hours pays $20 per hour. Server A (10 hours) gets $200, Server B (7 hours) gets $140, and the food runner (8 hours) gets $160.
Now switch to points: servers earn 1.5 points per hour and the food runner earns 1. That’s 33.5 points, so each point is worth about $14.93.
| Employee | Hours | Hours-based payout | Points | Points-based payout |
|---|---|---|---|---|
| Server A | 10 | $200 | 15 | $223.88 |
| Server B | 7 | $140 | 10.5 | $156.72 |
| Food runner | 8 | $160 | 8 | $119.40 |
| Total | 25 | $500 | 33.5 | $500 |
The math is easy for one pool on one shift. It breaks spreadsheets once you run several pools a day, with staff clocking in and out at different times.
Tip pooling rules to know before you set one up
In the United States, the Fair Labor Standards Act (FLSA) sets the federal rules for tip pools. The U.S. Department of Labor (DOL) explains them in Fact Sheet #15. Employers can require staff to pool tips with other eligible employees, within these limits:
- Manager tips. Employers, managers, and supervisors can’t keep employees’ tips, except tips for service a manager directly and solely provides.
- Tip credit pools. With a tip credit, only customarily tipped staff can join, such as servers, bussers, service bartenders, and counter staff.
- Minimum wage pools. If everyone earns at least the $7.25 federal minimum wage in cash, the pool can include cooks and dishwashers.
- Payday deadline. You must pay out all pooled tips by the regular payday.
- Record-keeping. Mandatory tip pools require records of each employee who receives tips and how much they got.
Employment attorney Felice Ekelman says the most common mistake is putting the wrong people in the pool.
“Generally speaking, managers cannot be in a tip pool… Titles are not determinative. It depends on what the person does and doesn’t do…There are certain positions that get litigated a lot. One is the expediter. If the expediter is not serving, they’re probably not going to meet the tip pool requirement of being directly engaged in service.”
— Felice Ekelman, Principal at Jackson Lewis P.C.
State law can be stricter. Where state and federal rules differ, the DOL says you must follow the standard that protects employees most. Check your state in our guide to tip pooling laws.
Ekelman also links many tip lawsuits to a lack of transparency.
“If I’m in the service staff and I don’t understand how the tip pool works… I’m going to be suspicious. If you are transparent and… show all your front of house staff the tip distribution from the shift before every shift… There’s going to be much more trust in the process…A lot of time litigation arises because folks don’t understand and because they think the employer is taking their tips.”
— Felice Ekelman, Principal at Jackson Lewis P.C.
Tip pooling software with detailed reports keeps a record of who was in each pool, their hours, and their payouts. This section is general information, not legal advice, so check your setup with an employment attorney.
What tools help manage restaurant tip pooling?
Tip pooling can help your team get paid more fairly and increase teamwork and morale. But without tip pooling software, trying to work out tip pool payouts on your own can be a hefty task, with so many rules, reports and data sources.
Disadvantages of doing tip pools on paper or spreadsheets
You may choose to calculate your tip pool by hand, using paper or spreadsheets. These options can be overwhelming, as well as:
- Time-consuming. Restaurant managers spend up to 8 hours a week calculating tips the traditional way.
- Prone to human error. You’re running around trying to put out fires, and in the chaos, you accidentally short a bartender on her tip payout. When she eventually brings it to your attention, you have to go back and redo your work. One too many errors on a paycheck can lower employee satisfaction.
- Too complicated. You have the staff’s logged hours stored in the POS, but their tip amounts are divided between cash and credit card. Not only is your browser full of open tabs, but your desk is piled high with sheets.
Types of tip pooling tools
- Spreadsheets and free calculators. They’re free, but you enter hours and tips by hand, so one typo can short a paycheck.
- POS tip-out features. Some POS systems handle basic tip-outs at the end of a shift. Many don’t pull hours from your schedule or support several pools.
- Standalone tip payout apps. These apps typically focus on one thing: digital tip payouts to employees. That’s one more system to reconcile with your schedule and payroll.
- Connected restaurant HR platforms. Platforms like 7shifts calculate tips from the same timesheets that drive scheduling and payroll. Nobody re-enters hours.
| Tool type | Cost | Automation | POS sync | Payroll sync | Payouts | Best for |
|---|---|---|---|---|---|---|
| Spreadsheets and free calculators | Free | None | Manual entry | Manual entry | Cash or payroll | One small pool |
| POS tip-out features | Varies by POS | Basic tip-outs | Built in | Varies | Varies | Simple tip-outs |
| Standalone tip payout apps | Varies by app | Payouts | Varies | Separate system | Cashless payouts | Fast tip access |
| Connected HR platforms (7shifts) | $49.99/mo per location | Pools, rules, and math | Toast, TouchBistro, Square, Revel, GoTab, and more | ADP Run, ADP Workforce Now, Gusto, 7shifts Payroll, CSV | On-demand tips in the app or payroll | Growing and multi-location teams |
How 7shifts simplifies tip pooling and distribution
What a tip pooling tool provides
7shifts’ software can manage tip pools for you. Create the tip pools you need and make digital tip payouts more accurate. So you can tip out with confidence for a team of 10 or a team of hundreds.
Our software also includes payroll and HR features, so you can manage your team all in one place.
Employees see their earned, paid, and owed tips in the 7shifts mobile app, so there are fewer end-of-shift questions. With On-Demand Tips powered by Clair, employees can access a portion of their earned tips in the 7shifts app shortly after a shift, at no cost to you. On-Demand Tips isn’t available in every state, and you can also pay tips through payroll.
Create custom tip pools that fit your team’s needs
Create as many tip pools as your restaurant needs with a simple rule creator that helps you create pools in under a minute. You can customize your tip-sharing and pooling to fit your restaurant’s needs and make adjustments at any time. 7shifts’ Tip Pooling software makes sure you’re in control of where the tips are coming from, which roles contribute to or receive from the pool, and how that distribution is calculated.
Fund each pool with a percentage of total tips or net sales. Then split it by hours, role percentages, or weighted points.
Save time with automated tip calculations
Put down your calculator. 7shifts’ Tip Pooling software does tip calculations for you – no math needed. And if your POS has a supported integration, or if you use 7punches to declare tips, the tool automatically syncs your tip data.
Automated tip pools work with Toast, TouchBistro, Square, Revel, and GoTab POS, and manual pools work with any POS. See all 7shifts integrations.
Reduce errors with detailed reports
With all your calculations done for you, you can eliminate costly human error that causes headaches when running payroll. Once it’s calculated, you can export and send directly to your payroll provider for payout. Better yet, it will instill confidence in your team that they’re being paid accurately.
7shifts integrates with ADP Run, ADP Workforce Now, Gusto, and 7shifts Payroll, with CSV export for Paylocity, UKG, and Paychex. Tip Management doesn’t tax tips automatically, but with 7shifts Payroll, owed tips flow straight into payroll for tax reporting.
Ready to save up to 8 hours a week on tip pooling with 7shifts? Start a free trial.
If you’re an existing 7shifts customer, you can try tip pooling for free. Enable a Tip Pooling trial within your account. Questions? Connect with Support.
2026 Tipping Playbook
Learn how to manage, distribute, and track tips fairly—while staying compliant and keeping your team’s trust.
How to choose the right tip pooling software
Single-location owners want hours back each week. Multi-location groups need the same pool rules at every location.
Use this checklist when you compare tip management software:
- Supports your split method: hours, role percentages, or weighted points
- Pulls hours from your schedule and time clock
- Syncs tips from your POS
- Sends tip data to your payroll provider
- Gives employees fast access to earned tips
- Shows employees what they’ve earned, been paid, and are owed
- Keeps reports you can pull for audits and recordkeeping
- Lists clear per-location pricing
7shifts Tip Management covers each item for $49.99 per month per location.
How Canadian Bakin’ simplifies tip payouts with 7shifts
At Canadian Bakin’ in Huntsville, Ala., owner Daniela Perallon instituted a tip pool to create pay equity amongst her team. While pleased with the results, she was unhappy with the amount of time it took her each week-and the chance for error with manual and spreadsheet calculations.
“Before it was a time-consuming, stressful, and unnecessary task, so the tip pool [feature] has saved time and mental energy. As a business owner, it’s mostly the mental energy you’re using.”
Now, Perallon uses 7shifts Tip Pooling tools to help manage her team’s tips, saving time that she can invest back into growing her business.
“For me, it’s freed up more time to focus on specials for the menu, marketing, customer outreach, All these different things to have more time and energy to focus on because tip pool is [taken care of].”
Perallon was able to separate some team members who work at Canadian Bakin’s local farmers’ market stall, as they collect their own cash tips. This unique aspect of their business gets managed easily, taking away the chance for human error.
“[The team] is getting assurance that calculation, there’s one less step where user error can occur. I could type in hours incorrectly or forget to take hours out, which happened a couple of times. It takes away my user error because 7shifts is doing all the work for us.”
Tip pooling software FAQ
What is tip pooling software?
It calculates and splits pooled tips using tip data from your POS and hours from your timesheets.
What tools help manage restaurant tip pooling?
Spreadsheets, POS tip-out features, standalone payout apps, and restaurant HR platforms like 7shifts. Connected platforms remove the most manual work because tips use the same hours as payroll.
How are tip pool shares calculated?
By hours worked, role percentages, or weighted points. In a $500 pool with 25 total hours, each hour earns $20.
Is tip pooling legal?
Yes, within FLSA limits. Managers can’t keep employees’ tips, and some states set stricter rules, so check yours.
Can back-of-house staff be included in a tip pool?
Yes, if everyone earns at least the $7.25 federal minimum wage in cash with no tip credit. Check your state’s rules too.
Is there free tip pooling software?
Yes, the 7shifts tip pool calculator template is free, but you enter hours and tips yourself. Paid software automates the math.
How much does tip pooling software cost?
7shifts Tip Management costs $49.99 per month per location. On-Demand Tips through Clair cost employers nothing.
Is tip pooling good for restaurants?
Yes, when the rules are clear. It evens out pay across shifts and encourages teamwork.
DJ Costantino, Content Writer
DJ Costantino
Content Writer
Hi! I'm D.J., 7shifts' resident Content Writer. I come from a family of chefs and have a background in food journalism. I'm always looking for ways to help make the restaurant industry better!
