Can you require servers to share tips?
Federal Rules
Under the FLSA, you can require tipped employees to pool their tips if you pay them the full federal minimum wage ($7.25 per hour) and do not take a tip credit. If you take a tip credit (paying less than minimum wage and counting tips toward the difference), you can still require tip pooling, but only among employees who customarily and regularly receive tips, such as servers, bussers, and bartenders.
Managers, owners, and supervisors cannot participate in tip pools, even if they sometimes perform tipped duties. If they do, you risk violating the law and owing back wages.
State Variations
Some states have stricter tip pooling laws. For example, California prohibits mandatory tip pooling entirely, while New York allows it but with specific requirements. Other states like Massachusetts and Illinois have their own rules. Always check your state's labor laws before implementing a tip pool.
Even where tip pooling is allowed, you must clearly communicate the policy to employees and apply it consistently. Some employers use a tip pool to encourage teamwork, but it can also cause disputes if not handled fairly.
- California: Mandatory tip pooling is prohibited.
- New York: Allowed, but only among employees who customarily receive tips.
- Massachusetts: Allowed, but only for tipped employees who regularly receive tips.
- Illinois: Allowed, but only for tipped employees.
- Texas: Follows federal law, allowing tip pooling among tipped employees.
Common mistakes
- Including managers or owners in the tip pool—this is illegal under federal law.
- Assuming tip pooling is allowed everywhere—some states ban it.
- Failing to inform employees about the tip pool policy in writing.
