Tip pooling rules: who can be in the pool, and can a manager take a cut?

Short answer: Your employer can require you to pool tips with coworkers. It cannot keep any of the pool, and neither can a manager or supervisor, no matter how much they helped on the floor. If your employer pays you a cash wage below the full minimum wage (takes a tip credit), the pool may include only staff who customarily receive tips: servers, bussers, bartenders, counter staff who serve customers. Cooks and dishwashers may be added only when everyone in the pool is paid at least the full minimum wage in cash. These are federal rules; states can be stricter.

By Goodhands Apps · Updated October 30, 2026 · 8 min read

This page describes the federal rules as stated by the Department of Labor and the Code of Federal Regulations. It is not legal advice. Last checked: 2026-10-30.

What is the difference between a tip pool and a tip-out?

A tip pool collects tips from a group and redistributes them by a formula, often hours worked or points per role. A tip-out is a share one worker pays to another, such as 3% of a server's sales to the busser. Federal law treats both as tip sharing and applies the same limits on who may receive the money (29 CFR 531.54). The percentages and formulas are the restaurant's policy; the list of who may be in the arrangement is law. The tip-out percentages guide covers the typical numbers.

Can my employer require me to pool tips?

Yes. "The FLSA allows employers to require employees to share or 'pool' tips with other eligible employees" (DOL Fact Sheet 15). There is no federal cap on how much of your tips the pool can take: "Section 3(m)(2)(A) does not impose a maximum contribution percentage on mandatory tip pools" (29 CFR 531.54). The employer must tell you the required contribution if it takes a tip credit, and if it collects the pool itself it must pay it out by the regular payday for that workweek or pay period, or as soon as practicable after if the amounts are not known by then (same section).

Who can be in the pool?

It depends on one question: does your employer take a tip credit?

With a tip credit, a mandatory pool "is limited to employees in occupations in which they customarily and regularly receive tips," and the fact sheet names "waiters, bellhops, counter personnel (who serve customers), bussers, and service bartenders" (DOL Fact Sheet 15). Without a tip credit, the employer "may impose a mandatory tip pooling arrangement that includes employees who are not employed in an occupation" that customarily receives tips, "such as dishwashers and cooks," but "only if all workers receive a direct cash wage of at least the federal minimum wage" (same). The regulation says the same in 29 CFR 531.54(c) and (d).

In the seven states with no tip credit (Alaska, California, Minnesota, Montana, Nevada, Oregon, Washington), every employer is in the right-hand column by default, so back-of-house pools are possible there under federal law. State law still applies; California, for example, bars pools that compensate "the owner(s), manager(s), or supervisor(s) of the business" (California DIR, tips FAQ). The state wage table shows which column your state's employers start in.

Can a manager take a cut of the tip pool?

No. "The FLSA prohibits employers from keeping any portion of employees' tips for any purpose," and "An employer may not require an employee to give their tips to the employer, a supervisor, or a manager" (DOL Fact Sheet 15). The regulation says this applies whether or not the employer takes a tip credit (29 CFR 531.52(b)).

Who counts as a manager or supervisor is a duties test, not a title. The fact sheet describes an employee "whose primary duty is managing the enterprise" or a department of it, who customarily directs the work of two or more employees, and "who has the authority to hire or fire other employees" or whose recommendations on hiring and firing carry particular weight. Owners with "at least a bona fide 20 percent equity interest" are managers for this purpose too (DOL Fact Sheet 15). The regulation defines manager and supervisor by pointing to the executive duties test in 29 CFR 541.100 (29 CFR 531.52(b)(2)). A shift lead who runs food and has no say in hiring is probably not a manager under this test. A general manager who covers a section on a Friday is.

One exception. "A manager or supervisor may keep only those tips that they receive directly from a customer" for service they "directly and solely" provided, "but would not be able to receive other employees' tips by participating in a tip pool" (DOL Fact Sheet 15; 29 CFR 531.52(b)(2)). If the manager takes a table start to finish and the guest tips them, that tip is theirs. It does not go in the pool, and they take nothing out of it.

How is a pool split?

Federal law does not say. The common methods are by hours worked, by points per role, or by sales. Here is a Saturday night by hours.

Four servers pool $1,200 in tips. Hours: Ana 6, Ben 6, Carla 5, Dev 3, for 20 hours total. The pool pays $60 per hour.

Ana's tips for the night are $360, whatever she personally collected at her tables. That is the figure for her daily record and her monthly report. If the manager had jumped into a section for two hours, the pool still pays out $1,200 to the four servers over 20 hours. Adding the manager as a fifth line is the violation.

How do I record pool money for taxes?

Tips you receive from a pool are your tips. The IRS lists "Tip amounts received from other workers through tip pools, or other tip sharing arrangements" as tips you must report (IRS, tip recordkeeping and reporting). Tips you put into a pool and did not get back are not yours; your daily record should show "the amount of tips you paid out to other employees through tip pools or tip splitting" and the names of the people you paid (IRS Publication 531). You report what you kept.

For the tips deduction, pool money counts for the worker who receives it. Tips received through a pool are qualified tips; a manager or supervisor's share from a pool is not (TD 10044, IRB 2026-18).

So the record for a pooled shift has two numbers: what you put in and what you took out. Goodhands Tip Tracker handles pools by points or hours and stores the share per shift; a notebook with two columns does the same job.

What if the pool looks wrong?

Start with the written policy. If your employer takes a tip credit it must have told you the pool contribution, and it must have told you it is taking the credit at all; an employer that skips that notice "cannot take the section 3(m)(2)(A) tip credit" (DOL Fact Sheet 15). Then compare the payout list to the table above.

The federal route is the DOL Wage and Hour Division, by phone at 1-866-487-9243 or through a local office. Complaints "are confidential," and an employer cannot retaliate against a worker for filing one or cooperating with an investigation (DOL WHD, how to file a complaint). Your state labor department is the other route, and in states with stricter rules it may be the better one. Bring your own record of shifts, tips collected and pool payouts; it is the evidence an investigator asks for first.

FAQ

Can the owner be in the pool if they work the floor?

No. An owner with a bona fide 20 percent or greater stake is a manager or supervisor under the federal rule and may not receive pool tips (DOL Fact Sheet 15). They may keep a tip a customer hands them directly for a table they alone served.

Can bartenders and servers be forced into one pool?

Yes. Both customarily receive tips, so both may be in a mandatory pool whether or not a tip credit is taken (DOL Fact Sheet 15).

Can cooks be in the pool at a restaurant that pays servers $2.13?

No. With a tip credit, the pool is limited to employees who customarily and regularly receive tips (29 CFR 531.54(c)). If the restaurant raised every pool member's cash wage to at least the full minimum, it could then add cooks.

Is there a maximum percentage the pool can take?

Not under federal law (29 CFR 531.54). The limit is on who receives the money, not how much. Some states regulate the formula; check your state labor department.

Do I report my pool share or the tips I collected at my tables?

Your pool share. You report the tips you ended up with after the pool and any tip-outs (IRS Publication 531).

This guide describes public DOL, CFR and IRS material as of the date above. It is not legal or tax advice, and state rules can be stricter than the federal rules described here. Goodhands Apps is not affiliated with the Department of Labor or the IRS. Last checked: 2026-10-30.

Guides describe public information and are not tax advice. Goodhands is not affiliated with the IRS.