Why does an employee owe money to the tip pool with no tips?

Why does an employee owe tips with $0 in collected tips?

If your tip pool is set up to calculate contributions based on a percentage of net sales rather than actual tips collected, an employee can show money owed to the pool even when they earned $0 in tips.

Why This Happens

7shifts looks strictly at the employee's net sales data when calculating tip pool contributions. 7shifts isn't designed to stop calculations if an employee has $0 in collected tips.

Because the employee generated net sales, 7shifts calculates the set percentage contribution based on those sales. That calculated amount then shows as a "tip in" owed to the pool - even though no physical tip money exists to cover it.

In this scenario, the calculated amount going into the tip pool to pay out other employees is funded directly out of the employer's pocket during payroll.

What To Do

If you want to prevent your business from covering tip pool gaps when net sales are high but collected tips are zero or low, you have two options:

• Option 1: Change your tip pool setup. Adjust your tip pool calculations to be based on the total amount of tips earned instead of net sales. This ensures employees only contribute a percentage of what they actually bring in.
• Option 2: Account for the variance. Keep your net sales structure, but be aware that when an employee has high net sales and low or zero tips, the difference will be funded by the business.