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Get Started with Tip Pooling for Team Management

With Team Plus, you can use tip pooling to equally divide each credit card tip across all tip-eligible team members clocked in at the time of the transaction. Tip pooling ensures equitable and timely tip payouts for your team and removes any alternate and complicated workflows you currently use to manually distribute tips — giving you more time for other aspects of your business.

Glossary

Review the table below to learn more about commonly used terms associated with tip pooling.

Term Definition
Tip distribution Tip distribution is how tips are allocated and paid out across a team. Depending on the needs of your business, you can pay out tips based on who processed the transaction (direct attribution), or you can collect and split tips as a part of a tip pool (tip pooling).
Tip pooling Tip pooling is a form of tip distribution where tips are aggregated into a collective pool and divided among a group of tip-eligible team members. Depending on the needs of the business, sellers will use a variety of different splits, the most common options being to split by hours worked in a workday and to split by hours worked in a business shift. Note: It’s also possible for sellers to have multiple tip pools, such as a bartender pool to split tips for drink orders, or a server pool to split tips for food orders.
Workday A workday is a rolling 24-hour period of time where all business activity takes place. For most businesses, the standard day (12 a.m.-11:59 p.m.) aligns with their workday. For businesses open past midnight, the workday hours should align with the time all team members have clocked out for the day. For example, for bars, the workday may span from 4 a.m.-3:59 a.m. to account for the few hours they’re open past midnight.

Get Started

Before setting up tip pooling, you need to check that each team member is selected or deselected to be a part of tip splitting for transactions. For example, if you don’t want a manager to receive tips, you’ll need to toggle off Tip eligible in their team member profile. To get started:

  1. Go to Team in your online Square Dashboard.

  2. Select the team member you want to edit to open their team member profile.

  3. Click Edit under the “Job and compensation” section.

  4. Toggle on or off  Tip eligible for each role.

After confirming that you applied tip pooling eligibility to all of your team members, you can turn on tip pooling. To do so:

  1. Go to Shifts in your online Square Dashboard.

  2. Select Settings > Tip distribution.

  3. For distribution method, select Pool tips per transaction or Pool tips by hours worked.

    1. Pool tips per transaction: Transaction tips are split equally among all tip-eligible team members clocked in at the time of the transaction. This distribution method works best if you want to reward your team based on the tips earned during their specific shift.

    2. Pool tips by hours worked: Transaction tips from sales made in a 24 hr workday are split among tip-eligible team members based on their hours worked. This distribution method works best if you want to reward team members who may not work their entire shift interacting with customers.

  4. Choose whether you want to apply tip pooling to Only this location or All locations.

  5. Click Save.

You have the option to toggle on or off Distribute unattributed tips equally, which is only relevant if you’ve selected Pool tips per transaction as the tip distribution method. If the setting is toggled on, tips received when no one is clocked in will be equally distributed among all tip-eligible team members who clocked in on that workday.

Once you follow the steps above, credit card tips will either split equally among all tip-eligible team members clocked in at the time of the transaction, or split among all tip-eligible team members based on their hours worked within a 24 hr workday. Any changes made in the middle of a pay period will not apply to transactions retroactively.  Note: Be sure to check your state and local laws regarding tip pooling, notice, and record-keeping requirements.

Permissions

For team members who help manage shifts and scheduling that don’t have owner-level or full access permissions, you need to update their permission set to include Manage tip settings. To do so:

  1. Go to Team in your online Square Dashboard.

  2. Select the team member you want to edit to open their team member profile.

  3. Under the Permissions section, click Edit.

  4. Next to “Permission set,” select Edit.

  5. Click on Timecards and check Manage tip settings.

  6. Click Continue > Save.

Tip Management and Reporting

With tip pooling set up, you can rest assured that your team members will receive the appropriate amount of tips throughout each workday. Follow the steps below to keep track of tips for team members by shift or by various time ranges.

View tips for team members by workday

  1. Go to Shifts in your online Square Dashboard.

  2. Select Workday.

  3. Choose a team member’s shift and select Tips earned from the pop-up screen.

  4. Credit card tips will be the total of that team member’s share of tips during the selected shift.

View tips for team members by date range

  1. Go to Shifts in your online Square Dashboard.

  2. Select Labor cost.

  3. Choose the date range and select any other applicable filters above the report.

  4. Each team member that worked during the chosen date range will appear with their associated tips.

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