Tip pooling means collecting tips and sharing them among staff. In the US it's legal, but employers, managers and supervisors can never keep employees' tips, including through a pool. If the employer takes a tip credit, only staff who customarily receive tips can share the pool; if it pays the full minimum wage, cooks and dishwashers can join too. In the UK, all tips must go to workers without deductions.
Tip pooling is common in restaurants, bars, hotels and salons, and the rules decide who gets a share. Get them wrong and you're not just upsetting staff: you can lose the right to use the tip credit and owe back wages. Here's what the US Department of Labor and the UK government say.
The US rules at a glance
| Question | US rule under the FLSA |
|---|---|
| Can the employer keep tips? | No, never, under any circumstances |
| Can managers or supervisors take from the pool? | No |
| Employer takes a tip credit | Pool limited to employees who customarily and regularly receive tips |
| Employer pays full minimum wage, no tip credit | Non-tipped staff, such as cooks and dishwashers, can share the pool |
| Mandatory pool run by the employer | Tips generally must be fully redistributed within the pay period |
| Records | Required for employees who receive tips |
Why managers can't touch the pool
In 2018, Congress amended the FLSA to expressly bar employers, including managers and supervisors, from keeping employees' tips. The Department of Labor's 2020 tip rule, whose relevant parts took effect on April 30, 2021, spells it out: an employer can't keep employees' tips under any circumstances, and managers and supervisors may not keep tips received by employees, including through tip pools.
That's the line most often crossed. A shift manager who also serves tables may be tempted to take a cut of the pool. Under the federal rule, they can't take tips received by other employees.
How the tip credit changes the pool
The tip credit is what lets an employer pay a tipped worker less than the minimum wage in cash, counting tips toward the rest. Under the FLSA, the employer must pay at least $2.13 an hour in cash wages, and can claim a tip credit of up to $5.12 an hour, making up the federal minimum wage of $7.25. A tipped employee is someone who customarily and regularly receives more than $30 a month in tips.
If you take the tip credit, the tip pool must be limited to employees who customarily and regularly receive tips, such as servers and bartenders. If you don't take a tip credit and pay everyone the full minimum wage, the Department of Labor says you can let employees who aren't tipped, such as cooks and dishwashers, take part. That's the single biggest decision in setting up a pool.
The notice you must give tipped staff
Before taking a tip credit, employers must tell tipped employees the following (federal figures as of October 2026):
- The cash wage being paid, which must be at least $2.13 an hour.
- The amount claimed as a tip credit, which can't exceed $5.12.
- That the tip credit can't exceed the tips the employee receives.
- That all tips are kept by the employee except under a valid tip pool limited to staff who customarily and regularly receive tips.
- That the tip credit won't apply to any employee who hasn't been told these rules.
If tips plus cash wages don't reach $7.25 an hour in a workweek, the employer must make up the difference. Many states set higher minimums, so check yours; our guide to the federal minimum wage shows which states go further.
Running a mandatory pool
If you collect tips to run a mandatory pool, the Department of Labor says you generally must fully redistribute them within the pay period. Employers who don't take a tip credit but run a mandatory pool must also keep payroll or other records showing each employee who receives tips and the weekly or monthly tips they report.
Quebec has a separate tipped rate, which our Quebec minimum wage guide explains alongside the overtime rules.
Tip pooling in the UK
The UK takes a different approach. The Employment (Allocation of Tips) Act 2023 makes it mandatory for all tips to be passed on to workers without deductions. A statutory code of practice on fair and transparent distribution of tips, gratuities and service charges came into force on Tuesday 1 October 2024, and gives guidance to employers and workers in tipping industries.
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The code turns that into four duties you can check against. Tips must reach staff by the end of the month after the customer paid them, so a tip left on 23 June must be paid out by 31 July at the latest. You need a written tipping policy, in plain language, available to every worker, including agency staff. You must keep a record of all tips and how each worker's share was worked out for three years. And any worker can make a written request to see that record, once every three months, going back up to 3 years.
Many UK venues share tips through a tronc, an arrangement that can also change how tips are taxed. Our guide to how tronc works explains the setup.
How to set up a tip pool that holds up
- Decide whether you'll take the tip credit, because it decides who can be in the pool.
- Keep owners, managers and supervisors out of the share of other employees' tips.
- Write the pool rules down: who's in, how shares are worked out and when tips are paid.
- Redistribute pooled tips within the pay period.
- Keep records of tips reported by each employee.
My verdict
Tip pooling is legal and often fairer than leaving tips with whoever served the table, but the rules are strict about one thing: the business and its managers stay out of the pot. In the US, the tip credit choice decides whether the kitchen can share; in the UK, every tip has to reach workers in full. Put the rules in writing before the first shift, not after the first complaint.
Shared tips should show clearly on the stub, and our guide to what a stub shows explains what employers must put on it.
Frequently asked questions
Is tip pooling legal?
Yes, in the US and the UK. In the US, employers and managers can't keep any of the tips, and the tip credit decides who can share. In the UK, all tips must be passed to workers without deductions.
Can managers be part of a tip pool?
Under the FLSA, managers and supervisors may not keep tips received by employees, including through tip pools.
Can cooks and dishwashers share tips?
Yes, if the employer pays the full minimum wage and takes no tip credit. If the employer takes a tip credit, the pool must be limited to employees who customarily and regularly receive tips.
What is the tip credit?
It lets an employer count tips toward the minimum wage. Under the FLSA the cash wage must be at least $2.13 an hour, and the maximum tip credit is $5.12 an hour, making up the federal minimum of $7.25.
When did the UK tips law start?
The Employment (Allocation of Tips) Act 2023 makes it mandatory to pass all tips to workers without deductions, and the statutory code of practice came into force on 1 October 2024.
