Tip Pooling Rules: Who Can Share Your Tips and When You Must Be Paid
- Managers, supervisors and owners can’t take any part of a tip pool, whether or not the employer takes a tip credit.
- If your employer pays a tipped cash wage, the pool can include only employees who customarily and regularly receive tips.
- Tips collected by the employer must be paid out by the regular payday for that workweek.
Tips are often a large share of pay for servers, bartenders and bussers. Federal law sets rules for how pooled tips can be shared.
Who can’t be in the pool
Under 29 CFR 531.54, the FLSA “expressly prohibits employers from requiring employees to share tips with managers or supervisors” or employers. That applies “regardless of whether an employer takes a tip credit.”
If your employer takes a tip credit
When an employer pays a reduced cash wage and counts your tips toward the minimum wage, it may require you to contribute to a pool “only if it is limited to employees who customarily and regularly receive tips,” and it must tell employees about any required pool. The federal cash wage for tipped employees is $2.13 an hour, and tips must make up the rest of the $7.25 minimum (DOL Fact Sheet #15). Many states set higher amounts.
No cap on contributions
The regulation says the FLSA “does not impose a maximum contribution percentage on mandatory tip pools,” so the percentage is set by your employer and state law.
When pooled tips must be paid
An employer that collects and redistributes tips must fully distribute them no later than the regular payday for the workweek when they were collected. If that isn’t possible, tips must go out “as soon as practicable after the regular payday.”
Checklist
- Ask who is in the pool and how shares are calculated.
- Compare tips reported on your pay stub to what you were told.
- If a manager takes a share, keep notes with dates.
- Keep your own daily tip log, which also helps at tax time.
Published October 27, 2026. Sources are linked in the text.
Header image: original graphic by JobPayRaise.com.
Comments (1)
Tax angle: for 2025 tax returns, workers in qualifying occupations can deduct up to $25,000 of qualified tips, including shared tips. It phases out above $150,000 of modified AGI ($300,000 joint), requires a valid Social Security number, and works whether or not you itemize. Source: IRS: What the “No Tax on Tips” deduction means for you.