What is a tip pool?
In a tip pool, the tips from a shift go into one total. That total is then divided among everyone in the pool by an agreed method, usually by hours worked, sometimes with weights by role. Nobody keeps their own tips directly; everyone takes a share of the whole.
Example: four baristas collect $240 in a shift. They worked 24 hours between them, so the pool pays $10 per hour. A barista who worked 6 hours takes $60.
What is a tip out?
In a tip out, each tipped employee keeps their own tips but pays part of them to coworkers who supported them, often the bartender, bussers or food runners. The amount is usually a set percentage of the server's sales or tips.
Example: a server sells $1,200 in food and $300 in drinks and earns $270 in tips. House policy is a 1.5% tip-out on food sales to the bussers and 5% on drink sales to the bar. The server pays $18 to the bussers and $15 to the bar, and keeps $237.
Side by side
| Tip pool | Tip out | |
|---|---|---|
| Who holds the tips | The pool, as one total | Each person keeps their own |
| Direction | Everyone in, everyone shares | From one person to others |
| Usually based on | Hours worked (often with role weights) | A percentage of sales or tips |
| Common in | Cafés, bars, counter service, salon support staff | Full-service restaurants |
| Main advantage | Simple, shared incentive | Rewards individual performance |
| Main drawback | Strong and weak shifts are evened out | Support staff income depends on others' sales |
Can you use both?
Yes, and many restaurants do. A common setup: servers tip out a percentage to the bar and bussers, and those tip-outs go into a bar pool and a support pool, which are then split by hours among the people who worked. The tip out moves money between groups; the pool divides it within a group.
Which is fairer?
Neither is fair or unfair by itself. What matters is that the rule is clear, written down, applied the same way every shift, and explained to the team before it applies. Whichever you choose:
- Write down who takes part, the percentages or weights, and how hours are counted.
- Split from actual clocked hours and real sales figures, not estimates.
- Keep a record of every shift's numbers. See tip records for employees.
Rules about who may take part in a pool or receive a tip-out vary, so check them before you set one up.
To split a pool by hours, use the free tip pool calculator, or follow the step-by-step guide to splitting tips by hours. To work out tip-outs, use the free tip-out calculator. Saved records for every shift are coming in the full product; see pricing.
You can combine ways. Many restaurants use a tip-out first, then each group (like the bussers) splits what it gets by hours. See all 6 ways to split tips.
This is general information, not legal or tax advice. Tip pooling rules vary by state, so check your state's labor department or an advisor.