Guides / Tip theft: what to do

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

If your employer keeps part of your tips, runs an illegal pool, or pays you less than the minimum wage once tips are counted, you can get that money back. Start keeping records now, then file with the Department of Labor's Wage and Hour Division (WHD) at 1-866-487-9243 or with your state labor agency. Federal claims have a two-year limit, or three years if the violation was willful, so don't sit on it.

The common violations

Your employer or a manager keeps tips

Federal law bars employers from keeping any part of employees' tips for any purpose, and from letting managers or supervisors keep any part, whether or not a tip credit is taken. That covers a manager in the pool, an owner taking a cut, and tips used to cover walkouts or breakage. Can a manager take your tips? explains who counts as a manager.

An illegal tip pool

If your employer pays you a tipped cash wage (a tip credit), a required pool can include only coworkers in jobs that customarily and regularly get tips. Sending part of it to cooks or dishwashers is legal only when everyone in the pool gets at least the full federal minimum wage in cash. Collected tips also have to be paid out no later than the regular payday for that workweek, or as soon as practicable after it if the amounts can't be worked out before payroll. See Tip pooling rules.

A tip credit without the required notice

Before taking a tip credit, your employer has to tell you the cash wage it's paying (at least $2.13 an hour federally), the tip credit it's claiming (no more than $5.12), that the credit can't exceed the tips you actually get, that you keep all your tips except for a valid pool, and that the credit doesn't apply unless you were told. An employer that skipped this notice can't take the tip credit.

Cash wage plus tips under the minimum wage

With a tip credit, your cash wage plus your tips has to reach at least the full minimum wage for each workweek. If it doesn't, your employer must make up the difference by the regular payday. Federal example for a 30-hour week: $2.13 x 30 is $63.90 in cash wages, plus $150 in tips, is $213.90. The minimum is $7.25 x 30, or $217.50. Your employer owes you $3.60 for that week. Small gaps like this are easy to miss and add up. Your state's minimum may be higher; see tipped minimum wage by state.

Card fees beyond the actual cost

Federally, your employer can take out no more than the actual processing fee on a card tip, the deduction can't drop your pay below minimum wage, and card tips can't be held until the card company pays the employer. Some states ban the deduction entirely, including California, Minnesota, New Jersey and Pennsylvania. More in credit card fees taken from tips.

Service charges kept by the house

Under federal law a mandatory service charge, like a set percentage added to a large party's bill, is not a tip, so the FLSA doesn't make it yours. Some states do. In Massachusetts a service charge must go only to the wait staff, service employees or service bartenders; the house can keep a fee only if it tells customers in writing that the fee isn't a tip or service charge. In Delaware it belongs to the serving employees unless the menu, placard or bill says in bold type that some or all of it goes to the house. Check your state page. A tip a customer chooses to leave on top of a service charge is still your tip.

Keep records

A claim is much easier to prove with your own records made at the time. Keep:

• Every pay stub, or a screenshot of each electronic one
• Your own clock-in and clock-out times, separate from the employer's system
• Each shift's cash tips, card tips and tip-outs, and the tip-out or pool sheets if you get them
• Who was in the pool on each shift, especially anyone with management duties
• Schedules, handbook pages, texts and anything you were given about the tip credit or the pool

Write each entry the day it happens and don't go back and change old ones. Your employer has to keep payroll records for at least 3 years, but its records are the ones you may be disputing. Cashout's Paycheck Check compares a pay stub you enter with the shifts you logged and flags gaps, which helps you spot a short check early. The current iPhone version often shows a gap for tipped workers that isn't real, so for now the Android version gives the more reliable comparison.

Filing with the Wage and Hour Division

Call WHD toll free at 1-866-487-9243 (1-866-4USWAGE), 8 a.m. to 5 p.m. in your time zone, to file; WHD takes general questions online. You'll be directed to the nearest WHD office. Have ready:

• Your name, address and phone number
• The company's name, location and phone number
• A manager's or owner's name
• The type of work you did
• How and when you were paid, such as cash or check, every Friday

Pay stubs and your own records of hours help. WHD says all its services are free and confidential, whether you're documented or not, and it may not disclose your name, the nature of the complaint, or whether a complaint exists. The DOL can supervise payment of back wages and can sue on employees' behalf for back wages plus an equal amount in liquidated damages.

The deadline

A federal FLSA claim has to be brought within two years after it accrued, or three years for a willful violation. Older shortfalls fall off as time passes, so file sooner rather than later. State deadlines can differ.

State agencies

Many states run their own wage claim process and some have stronger tip rules than federal law. California claims go to the Labor Commissioner's Office (California claims), and New York's go to the state Department of Labor (New York claims). Every state page has an "If you are underpaid" section that says where to file; start at tipped minimum wage by state and pick yours.

Retaliation is illegal

FLSA section 15(a)(3) makes it illegal to fire or in any other way discriminate against an employee for filing a complaint or taking part in a proceeding. The DOL says the protection covers complaints made orally or in writing, complaints to WHD are protected, and most courts have held that complaints to your employer are protected too. If you're retaliated against, you can seek reinstatement, lost wages and an additional equal amount as liquidated damages. Cut hours or a sudden firing after a complaint can be a second claim, so write down the dates.

Talking to a lawyer

You don't have to go through WHD. You can file a private lawsuit to recover back wages, an equal amount in liquidated damages, and attorney's fees and court costs. When workers win, the court orders the employer to pay a reasonable attorney's fee and the costs of the case, on top of the judgment. One or more workers can sue on behalf of themselves and other employees in the same situation. A wage and hour lawyer can tell you whether federal or state law gives you the better claim.

Common questions

Can I file anonymously?

WHD keeps complaints confidential: it may not disclose the complainant's name or that a complaint exists. Your employer may still guess, which is why the retaliation protection matters.

Do I need a lawyer to file with the DOL?

No. A WHD complaint starts with a phone call, and its services are free.

How much can I recover?

For tips your employer kept: the tips, any tip credit it took, and an equal amount in liquidated damages. For minimum wage shortfalls: the unpaid wages plus an equal amount.

Does immigration status matter?

WHD says its services are free and confidential whether you're documented or not.

Track it all with Cashout. Shifts, tips, unpaid breaks, taxes, and mileage, logged in seconds. iPhone · Android