The Case for Tipping and Unrestricted Tip-Pooling: Promoting Intrafirm Cooperation

20 Pages Posted: 2 Feb 2016 Last revised: 24 May 2017

See all articles by Samuel Estreicher

Samuel Estreicher

New York University Law School

Jonathan Remy Nash

Emory University School of Law

Date Written: February 1, 2016

Abstract

Going against the well-established tipping norm in the United States, a growing number of restaurant owners are moving to ban tipping, and instead raise prices, in their restaurants. They argue that existing law precludes them from sharing tips with “back-of-the-house” employees (like chefs and dishwashers), and thus makes it hard to compensate those employees fairly. We argue that the movement against tipping is ill-advised. Tipping is a valuable social institution that allows customers to monitor service where management cannot. The better answer is to remove legal restrictions on tip-pooling. Pooling tips among a broad swath of employees (other than management-level employees) is in keeping with the cooperative effort that underlies the provision of service in settings like restaurants.

Keywords: Tipping; Norms; Employment law; Labor law; Tax law

JEL Classification: K31

Suggested Citation

Estreicher, Samuel and Nash, Jonathan, The Case for Tipping and Unrestricted Tip-Pooling: Promoting Intrafirm Cooperation (February 1, 2016). NYU School of Law, Public Law Research Paper No. 16-05; NYU Law and Economics Research Paper No. 16-07; Emory Legal Studies Research Paper No. 16-401; Boston College Law Review, Vol. 59, 2018. Available at SSRN: https://ssrn.com/abstract=2725699 or http://dx.doi.org/10.2139/ssrn.2725699

Samuel Estreicher

New York University Law School ( email )

40 Washington Square South
New York, NY 10012-1099
United States
(212) 998-6226 (Phone)
(212) 995-4341 (Fax)

Jonathan Nash (Contact Author)

Emory University School of Law ( email )

1301 Clifton Road
Atlanta, GA 30322
United States

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