{"id":357819,"date":"2025-04-10T16:22:00","date_gmt":"2025-04-10T21:22:00","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/employment\/wages-and-benefits\/can-employers-take-their-employee-s-tips.html"},"modified":"2025-04-10T16:25:49","modified_gmt":"2025-04-10T21:25:49","slug":"can-employers-take-their-employee-s-tips","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/employment\/wages-and-benefits\/can-employers-take-their-employee-s-tips.html","title":{"rendered":"Can Employers Take Their Employee’s Tips?"},"content":{"rendered":"\n
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Can Employers Take Their Employee's Tips?<\/h1>\n
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\n By Susan Buckner, J.D.<\/a> | Legally reviewed by Laura Temme, Esq.<\/a>\n | Last updated\n
\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

\n \n <\/i>\n Fact-Checked\n <\/summary>\n\n
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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n

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Key Takeaways<\/h2>\n

No, federal law prohibits employers from taking employee tips. Tipped employees, such as waitstaff and bartenders, must receive all their tips, and employers must ensure total earnings meet the federal minimum wage. Mandatory tip pooling is permitted but must be transparent, and tips from such pools cannot go to employers. Credit card tip deductions for processing fees are allowed if wages still meet the minimum wage requirements, though some states, like California and Minnesota, mandate that employees receive the full amount of credit card tips.<\/p>\n\n <\/div>\n <\/div>\n<\/div>\n

More than four million Americans are estimated to work in \u201ctipped occupations.\u201d Tipped employees regularly receive more than $30 per month in tips and gratuities. Bartenders and waitstaff are the most common tipped employees, but barbacks, housekeepers, and delivery drivers also depend on tips to supplement their pay.<\/p>\r\n

Federal and state labor laws protect tipped employees\u2019 wages<\/a> and ensure employers pay a full minimum wage. As more customers pay with credit cards and don\u2019t leave cash tips, employers can use various methods to gather and divide tips among employees. The Fair Labor Standards Act (FLSA) ensures that all workers get their due share and have legal recourse if their boss takes their tips.<\/p>\r\n

Tip Credits and Tip Pooling<\/b><\/h2>\r\n

If you tip your server an extra $20 after your meal, you expect them to get all of it.<\/p>\r\n

Under the FLSA, employee tips<\/a> belong to the employee. If the employee\u2019s tips boost their pay above the minimum hourly wage, the employer cannot reduce or withhold their hourly pay. Some tipped workers in high-value locations like Las Vegas can make several hundred dollars per night in tips. But they are still entitled to their hourly wage.<\/p>\r\n

Tip Credits<\/b><\/h3>\r\n

Employers must pay tipped workers a federal minimum wage<\/a> of at least $2.13 per hour. If the amount of tips per pay period does not equal the federal or state minimum wage, the employer must make up the difference. The \u201ctip credit\u201d allows employers to advertise tipped jobs at the minimum wage, with credit for the employee\u2019s tips.<\/p>\r\n

Tip Pooling<\/b><\/h3>\r\n

Many businesses have tip pooling arrangements to share tip benefits with back-of-house staff, such as bussers, dishwashers, and barbacks. Waitstaff and bartenders normally get the lion\u2019s share of tips, and tip pooling ensures everyone gets some money.<\/p>\r\n

Some businesses use voluntary tip pools, but others have a mandatory tip pool. The only requirement for a mandatory tip pool is that all employees be aware it exists. Employers may not take money from the tip pool for any reason.<\/p>\r\n

Credit Card Tips and Service Charges<\/b><\/h2>\r\n

Credit card tipping can make tip pooling more attractive to employers. People no longer leave piles of cash on tables anymore, and it\u2019s much easier to divvy up numbers from the register. On the other hand, credit card companies charge processing fees. Is that part of the tip or part of the cost of the meal?<\/p>\r\n

It depends on where you are. Federal law says<\/a> businesses may deduct credit card fees from the tip provided the employee\u2019s wage exceeds the minimum wage.<\/p>\r\n

Some states disagree. California state law<\/a> says these fees are \u201cbusiness expenses\u201d not part of the tip. Tipped employees in Minnesota<\/a> must also receive the full amount of tips paid by credit card or e-payment.<\/p>\r\n

Employers may add mandatory service charges to the bill. These are not tips, and employers can retain these amounts for themselves. A few cities or states may require employers to pass service charges to employees. Service charges are not employee tips and do not apply to tip credits.<\/p>\r\n

Wages and Overtime<\/b><\/h2>\r\n

Federal law<\/a> sets the minimum wage requirement, but states may set their own minimum wages. The U.S. Department of Labor Wage and Hour Division enforces labor laws throughout the states.<\/p>\r\n

Each state has its own department of labor to enforce state wage laws. For instance, California abolished tip credits and requires employers to pay employees the full amount<\/a> of the tips plus their full hourly wage.<\/p>\r\n

To calculate the overtime pay<\/a> rate for tipped employees, employers take the employee\u2019s minimum wage, multiply it by the statutory overtime rate (1.5 or \u201ctime and a half\u201d), and subtract the maximum tip credit (capped by the FLSA at $5.12 per hour). This figure is the employee\u2019s overtime rate. For employees in states without tip credits, employees work straight overtime, plus tips.<\/p>\r\n

If Your Employer Takes Your Tips<\/b><\/h2>\r\n

FLSA regulations are clear: Employers cannot take tips from workers and have no right to any portion of pooled tips.<\/b><\/p>\r\n

A valid tip pooling arrangement can split tips among non-tipped employees, but managers and supervisors cannot share them.<\/p>\r\n

If you believe your employer has withheld tips, consider speaking with an employment attorney. You should also take steps to preserve any evidence of missing tips or wages.<\/p>\r\n

Under the FLSA, employers must:<\/p>\r\n