How Does Tipping Out Work? Complete Guide for Restaurant Owners

How do you split tips fairly between servers, bartenders, bussers, and hosts without creating drama? Tipping out—the practice of servers sharing tips with support staff—can make or break team morale in your restaurant.

Get the percentages wrong and your servers feel cheated. Set them too low and your bussers and bartenders resent carrying the load. Ignore the legal requirements and you're facing Department of Labor complaints.

This guide breaks down exactly how tipping out works, standard percentages by role, federal and state laws you need to follow, and how to create a transparent policy your team trusts. You'll learn the three calculation methods restaurants use, who's legally eligible to receive tips, and how to avoid the mistakes that cause resentment.

Tipping out, explained in plain English

What you need to know:

• Tipping out means servers share a portion of their tips with support staff who helped serve their tables—bussers, bartenders, hosts, food runners.
• It's typically calculated as a percentage of tips earned (10-30%) or percentage of sales (1-4%), depending on your restaurant's policy.
• You can require it, as long as tips only go to eligible employees (not managers or owners).
• Tipping culture debates are about customer behavior—tipping out is about internal team fairness.
• Clear, written policies prevent confusion and build trust with your team.

What is tipping out?

Tipping out is when servers, bartenders, or other tipped employees share a portion of their tips with support staff who contributed to the customer experience. Instead of front-of-house staff keeping 100% of their tips, they distribute a percentage to the team members who helped them—bussers clearing tables, bartenders making drinks, hosts seating guests, or food runners delivering orders.

Here's why tipping out exists: customers usually tip based on their overall experience, not just the server's performance. If the busser kept water glasses filled, the bartender made perfect cocktails, and the food runner delivered hot food quickly, they all contributed to that 20% tip. Tipping out recognizes that restaurant service is a team effort.

Tipping out vs. general tipping: These terms get confused, but they're different:

• General tipping is what customers do—leaving 15-20% gratuity for service.
• Tipping out is what happens after customers leave—how your servers redistribute those tips internally to support staff.

Think of it this way: tipping is between your customer and your server. Tipping out is between your server and the rest of your team.

Most restaurants have a written tip out policy that specifies exactly who gets tipped out, how much, and how it's calculated. Without clear rules, you end up with resentment, arguments about fairness, and servers who feel like they're doing all the work while giving away too much of their earnings. With the right policy, everyone knows what to expect and feels fairly compensated for their role.

How does tipping out work in a restaurant?

Not every restaurant position receives tip outs, and federal law is clear about who's eligible. Here's who typically gets tipped out:

• Bussers and busboys clear tables, reset them for the next guest, and keep the dining room running smoothly. They're usually first in line for tip outs because they directly support servers. Standard tip out: 10-30% of a server's tips, or 1-2% of total sales.
• Bartenders and barbacks prepare drinks for the dining room, not just bar guests. When a server's table orders cocktails, the bartender made those drinks—so they get tipped out. Typical range: 10-20% of a server's tips, or 1-2% of sales. Barbacks (who stock, clean, and support bartenders) usually receive a cut from the bartender.
• Food runners deliver plates from the kitchen to tables, allowing servers to focus on customer interaction. They typically receive 5-10% of server tips or around 1% of sales.
• Hosts and hostesses manage seating, coordinate timing, and set the tone for the dining experience. Not every restaurant tips out hosts, but many do—usually 3-5% of server tips or 0.5-1% of sales.
• Kitchen staff like line cooks and dishwashers generally cannot receive tip outs under federal law if you're taking a tip credit. However, some states allow tip sharing with back-of-house staff under specific conditions. Check your state's rules before including kitchen workers in your tip out policy.

How tip outs are calculated

Restaurants use different calculation methods depending on what feels fairest for their team and what's easiest to track. Here are the three most common approaches:

• Percentage of tips earned: Servers give a percentage of their total tips to support staff. If a server makes $200 in tips and the policy is 20% tip out, they distribute $40 to bussers, bartenders, and other eligible staff. This method is straightforward but requires tracking individual tip amounts.
• Percentage of sales: Servers tip out based on their total sales, not their actual tips. If a server has $1,000 in sales and the tip out rate is 3%, they owe $30 to the tip pool regardless of how much they were actually tipped. This protects support staff from bad tippers but can penalize servers who get stiffed.
• Points system: Each position gets assigned points based on their role and hours worked. Tips are pooled and divided proportionally. For example, servers get 10 points, bussers get 7 points, hosts get 5 points. If there are 50 total points and $500 in the tip pool, each point is worth $10. This method works well for team-oriented restaurants but requires more administrative tracking.

Standard tip out percentages by role

If you're setting up a tip out policy for the first time or reviewing your current system, here's what's typical across the restaurant industry. Keep in mind these are guidelines, not rules—your specific percentages should reflect your team structure and service model.

• Servers tipping out bartenders: 10-20% of server tips, or 1-2% of total sales. This covers drinks made for dining room tables. If your restaurant is cocktail-heavy with a full bar program, expect to be on the higher end. If you only serve beer and wine, you might land closer to 10%.
• Servers tipping out bussers: 10-30% of server tips, or 1-2.5% of sales. Bussers who reset tables, run food, and keep the dining room clean typically receive one of the larger tip out percentages since they directly impact table turnover and server efficiency.
• Servers tipping out food runners: 5-10% of server tips, or around 1% of sales. Food runners expedite service but usually have less contact time with guests than bussers, so their percentage is typically lower.
• Servers tipping out hosts: 3-5% of server tips, or 0.5-1% of sales. Not every restaurant tips out hosts, especially if they're paid a higher hourly wage. But in high-volume restaurants where hosts manage complex floor plans and waitlists, tipping them out recognizes their contribution to smooth service.
• Bartenders tipping out barbacks: 10-20% of bartender tips, or 1-2% of bar sales. Barbacks stock, clean, and support bartenders so they can focus on making drinks and engaging with guests.

Total tip out range: When you add it all up, servers typically tip out 20-40% of their total tips across all support positions. This might sound high, but remember—these percentages reflect a team effort to earn those tips in the first place.

Do servers have to tip out?

Yes, restaurants can require servers to tip out support staff—but only if you follow federal and state labor laws.

Under the Fair Labor Standards Act (FLSA), employers can mandate tip sharing or tip pooling as long as tips only go to employees who customarily and regularly receive tips. That means servers, bartenders, bussers, hosts, and food runners are fair game. Managers, supervisors, and owners cannot participate in the tip pool, even if they occasionally help with service.

Here's where it gets tricky: if your restaurant takes a tip credit (paying tipped employees below minimum wage and using their tips to make up the difference), you must follow stricter rules. You can only require tip sharing among directly tipped employees—those who interact with customers. If you're not taking a tip credit and paying everyone at least full minimum wage, you have more flexibility in some states to include back-of-house staff like cooks.

The key is transparency. You can't spring tip out requirements on your team after they've been hired. Your tip out policy should be:

• Written down clearly in your employee handbook
• Explained during onboarding before anyone works their first shift
• Applied consistently to everyone in the same position
• Reasonable in amount (courts have ruled against excessive tip out percentages that effectively transfer wages to the employer's benefit)

If servers feel your tip out policy is unfair or illegal, they can file a complaint with the Department of Labor. Keep your policy reasonable, transparent, and compliant to avoid disputes.

Tipping out laws you need to know

Tip out policies aren't just about fairness, they're regulated by federal and state labor laws. Get them wrong and you're looking at Department of Labor complaints, back wages, and potential lawsuits. Here's what you need to know to stay compliant.

Federal law basics (FLSA)

The Fair Labor Standards Act sets the ground rules for tipping nationwide. Under federal law, tips belong to employees, not the business. You can require tip pooling or tip sharing, but only among employees who customarily receive tips. Managers, supervisors, and business owners cannot take any portion of the tip pool, period. If you take a tip credit (paying tipped employees $2.13/hour and using tips to reach minimum wage), your tip pool can only include employees who directly serve customers. No back-of-house staff like cooks or dishwashers.

State and local differences matter: Some states ban tip credits entirely and require full minimum wage for all employees, regardless of tips. California, Oregon, Washington, Montana, Nevada, Minnesota, and Alaska all follow this rule. In these states, you have more flexibility to include back-of-house workers in tip pools since you're not taking a tip credit. Other states have their own tip pooling restrictions, maximum tip out percentages, or specific roles that must be included or excluded. Check your state's Department of Labor website for current rules.

Who absolutely cannot receive tips: Even in states with more flexible tip pooling laws, certain people are always off-limits. Business owners cannot take tips, even if they work the floor. Managers and supervisors with authority to hire, fire, or direct employees are excluded. This applies even if they occasionally run food or help during a rush.

Recordkeeping requirements: Federal law requires you to maintain accurate records of all tips received and distributed. Keep time cards, tip reports, and tip out calculations for at least three years. If an employee disputes your tip out policy or claims they were shorted, you'll need documentation to defend yourself. Digital systems that automatically track and calculate tip outs give you an audit trail if disputes arise.

Bottom line: Consult your state's labor laws or talk to an employment attorney before finalizing your tip out policy. Compliance isn't optional, and penalties for violations add up fast.

Best practices for a fair tip out policy

A good tip out policy prevents arguments, builds trust, and makes sure everyone feels fairly compensated. Here's how to create one that works for your team:

• Write it down. Don't rely on verbal agreements or "that's just how we've always done it." Document your tip out percentages, eligible positions, and calculation method in your employee handbook. Make it available during onboarding so new hires know exactly what to expect before they start.
• Communicate clearly from day one. Walk new servers, bussers, and bartenders through your tip out policy during training. Show them real examples: "If you make $200 in tips on Friday night, here's how much goes to each position." No surprises means no resentment.
• Review regularly. Your tip out policy should evolve with your business. If you add food runners, adjust percentages. If you switch from percentage of tips to percentage of sales, communicate why. Survey your team periodically to see if the policy feels fair—if servers consistently feel overtipped out or bussers feel undervalued, adjust.
• Use tools that reduce friction. Manual tip out calculations at the end of a shift are tedious and error-prone. Servers rushing to calculate percentages after a long night make mistakes. Digital systems that automatically calculate and track tip outs eliminate the math, reduce disputes, and give you documentation if questions arise. 

Homebase's tip management tools handle the calculations and keep records organized, so you're spending less time policing tip outs and more time running your restaurant.

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Tipping out FAQs

What does tipping out mean?

Tipping out means tipped employees share a portion of their tips with support staff who contributed to customer service. Servers typically tip out bussers, bartenders, food runners, and hosts based on either a percentage of tips earned or a percentage of total sales.

Do hosts get tipped out?

It depends on the restaurant. Many high-volume restaurants tip out hosts because they manage floor plans, coordinate seating, and set the tone for the guest experience. Typical tip out for hosts is 3-5% of server tips or 0.5-1% of sales. Some restaurants pay hosts higher hourly wages instead of including them in tip outs.

Do bussers make tips?

Yes, bussers typically receive tips through tip outs from servers. They rarely receive tips directly from customers but get a share of server tips—usually 10-30% of what servers earn or 1-2.5% of total sales. This compensates them for clearing tables, resetting them, and supporting servers.

Is tipping out legal?

Yes, tipping out is legal when done correctly. Federal law allows mandatory tip sharing as long as tips only go to employees who customarily receive tips—not managers, supervisors, or owners. Your tip out policy must be transparent, reasonable, and comply with federal and state labor laws.

Make tipping out simpler for your team

Tipping out shouldn't be the hardest part of your night. When servers are manually calculating percentages at 11 PM after a double shift, mistakes happen. When your team doesn't trust the math, resentment builds.

Homebase takes tip distribution off your plate. Set your tip out policy once—by percentage of tips, percentage of sales, or however you run your restaurant—and we'll handle the calculations automatically. Your team sees exactly how tips are distributed, builds trust in the system, and stops questioning whether the math adds up.

You'll spend less time playing referee over tip disputes and more time focusing on what actually matters—great food, great service, great team. Plus, with everything tracked digitally, you've got the documentation you need if labor questions come up.

Ready to stop doing tip out math on napkins? Try Homebase free and see how much time you get back every week.