Accounting Automation Facilitates Easy Transition to New 2021 Tip/Gratuity Allocation Regulations

The United States Department of Labor (DOL) recently amended tip and gratuity distribution regulations. These tip and gratuity regulations begin next month.

The new tipping regulations narrow the pay gap between front-of-house workers and back-of-house workers.

The regulations broaden tip and gratuity distribution to back-of-house workers. Such workers include dishwashers, cooks, and similar.

Workers who are not normally tipped directly by guests, but contribute to an overall hospitality experience, like dining, are now eligible to receive a portion of pooled gratuities. They can participate in a tip pool.

Previously, only employees who received tips directly were eligible for a tip pool.

These new tip and gratuity regulations also prohibit employers from receiving tips earned by employees.

Additionally, regulations also remove the 80/20 Rule. The 80/20 Rule says restaurants must directly pay servers the full minimum wage – even for work that won’t directly result in tips and/or gratuities when such tasks amount to more than 20% of their time.

Evention’s automated tip and gratuity distribution allows hotels and restaurants to easily remain nimble amidst changing tip and gratuity regulations.

Leveraging automation facilitates simple tip and gratuity calculation. Tips and gratuities can be easily allocated – no matter the nature of the distribution.

Automation empowers hospitality to allocate gratuity based on varied percentages and tip pool members. As such, banquets and outlets benefit from accurate and efficient tip distribution.

“With Evention automation, tip and gratuity distribution remains easily flexible to changing allocation-related regulations,” Evention Tips & Gratuities Product Manager, Seth Freiesleben, said. “It allows restaurant and hotel banquet and outlet operations to maintain, and in some cases even improve, accuracy and efficiency despite change.”

Automating tip and gratuity operations means hotels and restaurants can easily adjust to the upcoming regulation changes. Ultimately, this accounting automation benefits client-facing operations – even as distribution rules change.