Guides / Can a manager take your tips?

By NorseHorse. Updated October 16, 2026. General information, not legal advice.

No. Under the Fair Labor Standards Act (FLSA), your employer can't keep any part of your tips, and it can't let managers or supervisors keep any part of them either. That holds whether you're paid a tipped cash wage or the full minimum wage, and it includes tip pools. The one exception is narrow: a manager can keep a tip a customer gives them directly for service they alone provided.

The rule

Section 3(m)(2)(B) of the FLSA, added in 2018, says an employer may not keep its employees' tips for any purpose, including by allowing managers or supervisors to keep any portion of them, regardless of whether it takes a tip credit. The DOL's regulations repeat it: an employer can't require you to share tips with managers or supervisors, and can't let them receive tips from a pool.

Your employer can't get around this by having you hand tips to the boss. The DOL says an employer may not require an employee to give their tips to the employer, a supervisor or a manager.

Who counts as a manager

Duties decide it, not the job title. Under the federal rule a manager or supervisor is anyone who meets all three of these:

1. Their primary duty is managing the business or a recognized department or subdivision of it.
2. They customarily and regularly direct the work of at least two full-time employees or the equivalent.
3. They can hire or fire, or their recommendations on hiring and firing get particular weight.

Owners who hold at least a bona fide 20 percent equity stake and actively manage the business are treated the same way. A "bar manager" or "shift lead" who meets the test is out of the tips no matter how many hours they spend behind the bar. Someone with a manager title who doesn't meet all three isn't covered by this rule, though some states draw the line differently. Tip pooling rules has state examples.

What a working manager can and can't do

Plenty of managers take tables, pour drinks or cut hair. Federal rules let a manager keep tips that customers give them directly for the service the manager directly and solely provides. The DOL's example: a salon manager may keep tips left by customers whose hair she personally styles. A manager who bartends alone on a slow Monday keeps the tips from that bar.

What a manager can't do:

• Take a share of the pool or the tip-out. Managers can put money into a mandatory pool, but they can't receive tips from it. Working a rush alongside you doesn't change that.
• Keep tips for service other people helped provide. The exception covers only service the manager provided alone.
• Skim card tips. Your employer can deduct no more than the actual card processing fee from a card tip, and the fee can't take you below minimum wage. A flat "processing" cut above the real fee is tips being kept. See credit card fees taken from tips.
• Take tips to cover walkouts, breakage or shortages. Your employer can't keep any part of your tips for any purpose.

A manager can voluntarily tip out part of their own tips to staff. The DOL doesn't treat that as being part of a tip pool.

What you can get back

An employer that keeps tips in violation of section 3(m)(2)(B) is liable to the employees for any tip credit it took plus all the tips it unlawfully kept, plus an additional equal amount as liquidated damages (FLSA section 16(b)). In plain terms, you can recover the tips, the tip credit, and the same amount again. If you sue and win, the court also awards a reasonable attorney's fee, paid by the employer. The DOL can assess civil money penalties against employers who take tips, even when the violation isn't repeated or willful.

Example: a manager took $40 a week from your pool for 50 weeks. That's $2,000 in tips. If your employer also took a tip credit, that amount is added, and liquidated damages double the total.

How to complain

1. Write it down. Dates, who was in the pool, what you were paid, and any tip-out sheets or messages. The tip log template works for this.
2. Contact the Wage and Hour Division (WHD). Call 1-866-487-9243 to file; WHD also takes general questions online. Have your name and contact details, the company's name, address and phone, a manager or owner name, the type of work you did, and how and when you were paid. Pay stubs and your own hour records help.
3. Know your protections. WHD complaints are confidential, and its services are free whether you're documented or not. Firing or otherwise retaliating against you for complaining is illegal under FLSA section 15(a)(3).
4. Watch the clock. A federal claim has to be brought within two years, or three if the violation was willful.

Your state labor department may also take the claim, and some states give more protection. Find yours on your state's page under tipped minimum wage by state, in the "If you are underpaid" section. Tip theft: what to do walks through the whole process, including working with a lawyer.

Common questions

Can a manager be in the tip pool if they work the floor?

They can pay into it, but they can't take anything out.

Can the owner keep the tips if it's a small business?

No. An owner with a bona fide 20 percent or larger stake who actively manages the business is treated as a manager under the federal rule, so the owner can't keep employees' tips either.

My manager takes tips only from the big parties. Is that allowed?

Only if the manager alone served that party. A voluntary tip on a party you served is yours. A mandatory service charge is different: under federal law it isn't a tip, and your state may or may not require it to go to staff.

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