Guides / Tip pooling rules

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

Under federal law, who can share your tip pool depends on one thing: whether your employer takes a tip credit. If it pays you a tipped cash wage, the pool is limited to coworkers who customarily and regularly get tips. If it pays everyone at least the full federal minimum wage, cooks and dishwashers can be included. Managers, supervisors and the employer can never take from the pool.

The 2018 change

On March 23, 2018, Congress amended section 3(m) of the Fair Labor Standards Act (FLSA) in the Consolidated Appropriations Act, 2018. The amendment, now section 3(m)(2)(B), says an employer may not keep its employees' tips for any purpose, including by letting managers or supervisors keep any portion of them, whether or not it takes a tip credit.

The same law removed the 2011 DOL regulations that had barred employers paying the full federal minimum wage from requiring tip pools with back-of-house staff. That change is what lets a restaurant paying full minimum wage pool with the kitchen. The DOL then published its 2020 Tip Rule, with parts taking effect April 30, 2021, which put the rules into the regulations at 29 CFR 531.52 and 531.54.

Two kinds of pool

A tip credit is the part of the minimum wage your employer covers with your tips. Federally the cash wage can be as low as $2.13 an hour, with a tip credit of up to $5.12. Whether your employer uses one decides which pool it can run.

A "tipped employee" under the FLSA is someone in a job where they customarily and regularly get more than $30 a month in tips. The DOL's handbook names servers, counter staff who serve customers, bellhops, bussers and service bartenders as customarily tipped, and adds barbacks, sommeliers and sushi or teppanyaki chefs. It lists janitors, chefs and cooks, dishwashers, laundry room attendants, salad preparers and prep cooks as employees tipped workers can't be required to share with when a tip credit is taken.

The trap is a restaurant that pays servers $2.13 and still sends part of the pool to the kitchen. That pool is illegal under federal law, and every server in it is being shorted.

Managers and supervisors are out, by duties

Federal rules (29 CFR 531.52) decide who is a manager or supervisor by what the person does, not their title. The test is borrowed from the duties part of the executive exemption (29 CFR 541.100(a)(2) through (4)), without the salary test. Someone is a manager or supervisor if all of these are true:

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.

An owner with at least a bona fide 20 percent equity stake who is actively engaged in managing the business counts too. Such a person can't receive anything from the pool. A manager may put money into a mandatory pool, and may keep tips a customer gives them directly for service they directly and solely provided. Can a manager take your tips? covers working managers in detail.

No cap on contributions, but there are rules

Federal law doesn't limit the percentage or amount you can be required to put into a valid mandatory pool (29 CFR 531.54). A pool taking 50 percent of your tips isn't illegal on that basis alone. What federal law does require:

• Your employer can't keep any of the pooled tips.
• If it takes a tip credit, it must tell you the required contribution amount, and the credit can count only the tips you ultimately receive.
• If it collects and redistributes tips, it must pay them out no later than the regular payday for the workweek they were collected, or as soon as practicable after that payday if it can't work out the amounts before payroll.
• If it takes a tip credit, or collects tips to run a required pool, it must keep payroll records that mark each tipped employee and show the weekly or monthly tips each one reports.

Pool math is easy to check: the tip pool calculator splits by hours or points. Cashout's Tip Split divides a pool by points and shares the result as text; it doesn't split by hours.

State laws can be stricter

When state law differs from the FLSA, your employer has to follow whichever standard protects you more. A few examples from our state pages:

• California: a required pool can include employees in the chain of service, such as bussers and bartenders, under a fair and reasonable policy. Owners, managers and supervisors can't share in it. California tip pooling
• Massachusetts: tips and pools can go only to wait staff, service employees and service bartenders. Anyone with managerial responsibility that day can't share, and tips customers pay through the employer must be paid out by the end of the same business day. Massachusetts tip pooling
• Minnesota and New Hampshire: employers can't require you to join a pool. Minnesota, New Hampshire
• Utah: dishwashers, cooks, chefs and janitors can't be in a mandatory pool, and the arrangement has to be in writing and given to employees at hire or before it starts. Utah tip pooling
• North Dakota: pooling is allowed only among tipped employees, and a majority of them must approve it. North Dakota tip pooling
• Montana: with no tip credit allowed, an employer can require a pool that includes cooks and dishwashers after notifying staff. Montana tip pooling

Every state's rule is on its page under tipped minimum wage by state.

Common questions

Can cooks be in a tip pool?

Under federal law, only if your employer takes no tip credit and pays every worker in the pool a cash wage of at least the federal minimum wage. Some states, like Utah, bar cooks from mandatory pools anyway.

Can a shift lead be in the pool?

It depends on duties. A lead who meets all three parts of the duties test is a supervisor and can't receive from the pool, whatever the title says. A lead who doesn't, for example one with no say in hiring or firing, isn't excluded by the federal rule. State rules can reach further: Massachusetts excludes anyone with managerial responsibility that day.

Is there a maximum percentage my employer can take for the pool?

Not under federal law. Some states set limits; Delaware caps required sharing at 15 percent of the primary server's tips when several employees serve the same customer.

Can I refuse to join the pool?

Federally, an employer can require a valid pool. Minnesota and New Hampshire are exceptions, and Delaware allows required sharing only in the limited case above. If the pool is illegal, like one that pays a manager, see Tip theft: what to do.

Do I pay tax on what I put in the pool?

No. You report only what you keep, and the coworkers who get your share report it. See Tip-outs explained.

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