Tip-out is the one-way payment from a tipped front-of-house worker (usually a server) to support staff who helped during the shift. Common recipients: bartenders, bussers, food runners, hosts, sometimes expediters.
Three common models:
- % of sales: most common. You owe a flat percentage of your nightly food/bar sales, regardless of how well customers tipped. Typical range: 2–6% of sales total, often split as 1% bartender + 1–2% bussers + 1% runners.
- % of tips: common in bars and casual restaurants. You owe a flat percentage of the tips you collected. Typical range: 10–20%.
- Role-split: the house assigns each support role its own percentage of either sales or tips.
Tip-out is universally legal under the FLSA as long as no manager keeps any portion, the receiving roles are tip-eligible workers, and total wages still meet minimum wage. Tip-out arrangements should be disclosed in writing during hiring.
Tax treatment: you only report and pay tax on the tips you actually kept. If you collected $400 and tipped out $80, you report $320 in tips — not the gross $400.
Example
A server's $1,800 sales / $360 tips night with a 4% sales tip-out → $72 to support staff → $288 take-home tips, which is what gets reported on the daily tip sheet.