Tip Pooling Laws by State (2026)
Federal law lets employers require tip pools, but it bars employers, managers and supervisors from keeping any tips and limits who can share when the employer takes a tip credit. States can be stricter: seven do not allow a tip credit at all, Massachusetts and New York keep kitchen staff out of pools even at full minimum wage, and Minnesota bans required pools. The table covers all 50 states and DC, and the state guides add the details, with citations.
Last reviewed October 11, 2026.
State guides
In Canada, tips are governed by each province’s employment standards law instead. Tip laws in Canada by province
Federal tip pooling rules
- Who counts as tipped: an employee who customarily and regularly receives more than $30 a month in tips (29 U.S.C. § 203(t)).
- Tip credit: the employer can pay a cash wage as low as $2.13 an hour and count tips toward the rest of the $7.25 minimum, a credit of up to $5.12, if it tells the employee about the credit in advance and the employee keeps all tips except through a valid pool (29 U.S.C. § 203(m)(2)(A); 29 CFR 531.59). If tips fall short in a workweek, the employer pays the difference.
- No tips for the employer side: employers, managers and supervisors may not keep any part of employees’ tips, whether or not a tip credit is taken (§ 203(m)(2)(B), added in 2018). A manager is anyone whose duties meet the executive test in 29 CFR 541.100; salary and job title do not matter. A manager may keep only tips for service they provided directly and solely.
- Pools with a tip credit: can include only employees who customarily and regularly receive tips, such as servers, bussers, counter staff who serve customers and service bartenders (29 CFR 531.54(c)).
- Pools without a tip credit: if the employer pays the full minimum wage, the pool can also include cooks, dishwashers and other back-of-house staff (29 CFR 531.54(d)). Federal law sets no cap on contributions, and pooled tips must be paid out by the regular payday for the week they were collected.
- Card fees: the employer may deduct the actual percentage the card company charges on the tip, never more, and must still pay the tip by the regular payday (DOL Fact Sheet #15). Some states ban the deduction.
- Service charges: are not tips (29 CFR 531.55). They belong to the employer, and any part paid out to employees counts as wages.
Tip credit and pooling rules in every state
Rates in effect on October 11, 2026. In the last column, “only without a tip credit” means back-of-house staff can join a required pool only if everyone in it is paid the full state minimum wage.
| State | Minimum wage | Tipped cash wage | Back-of-house in a required pool |
|---|---|---|---|
| Alabama | $7.25 | $2.13 | Only without a tip credit |
| Alaska | $14.00 | No tip credit | Yes |
| Arizona | $15.15 | $12.15 | Only without a tip credit |
| Arkansas | $11.00 | $2.63 | Only without a tip credit |
| California | $16.90 | No tip credit | Yes |
| Colorado | $15.16 | $12.14 | Only without a tip credit |
| Connecticut | $16.94 | $6.38 | Only without a tip credit |
| Delaware | $15.00 | $2.23 | Only without a tip credit |
| District of Columbia | $18.40 | $10.30 | Only without a tip credit |
| Florida | $15.00 | $11.98 | Only without a tip credit |
| Georgia | $7.25 | $2.13 | Only without a tip credit |
| Hawaii | $16.00 | $14.75 | Only without a tip credit |
| Idaho | $7.25 | $3.35 | Only without a tip credit |
| Illinois | $15.00 | $9.00 | Only without a tip credit |
| Indiana | $7.25 | $2.13 | Only without a tip credit |
| Iowa | $7.25 | $4.35 | Only without a tip credit |
| Kansas | $7.25 | $2.13 | Only without a tip credit |
| Kentucky | $7.25 | $2.13 | Only without a tip credit |
| Louisiana | $7.25 | $2.13 | Only without a tip credit |
| Maine | $15.10 | $7.55 | Only without a tip credit |
| Maryland | $15.00 | $3.63 | Only without a tip credit |
| Massachusetts | $15.00 | $6.75 | No |
| Michigan | $13.73 | $5.49 | Unclear |
| Minnesota | $11.41 | No tip credit | No |
| Mississippi | $7.25 | $2.13 | Only without a tip credit |
| Missouri | $15.00 | $7.50 | Only without a tip credit |
| Montana | $10.85 | No tip credit | Yes |
| Nebraska | $15.00 | $2.13 | Only without a tip credit |
| Nevada | $12.00 | No tip credit | Yes |
| New Hampshire | $7.25 | $3.27 | Only without a tip credit |
| New Jersey | $15.92 | $6.05 | No |
| New Mexico | $12.00 | $3.00 | Only without a tip credit |
| New York | $17.00 | $11.35 | No |
| North Carolina | $7.25 | $2.13 | Only without a tip credit |
| North Dakota | $7.25 | $4.86 | Only without a tip credit |
| Ohio | $11.00 | $5.50 | Only without a tip credit |
| Oklahoma | $7.25 | $2.13 | Only without a tip credit |
| Oregon | $15.55 | No tip credit | Yes |
| Pennsylvania | $7.25 | $2.83 | Only without a tip credit |
| Rhode Island | $16.00 | $3.89 | Only without a tip credit |
| South Carolina | $7.25 | $2.13 | Only without a tip credit |
| South Dakota | $11.85 | $5.925 | Only without a tip credit |
| Tennessee | $7.25 | $2.13 | Only without a tip credit |
| Texas | $7.25 | $2.13 | Only without a tip credit |
| Utah | $7.25 | $2.13 | Only without a tip credit |
| Vermont | $14.42 | $7.21 | Only without a tip credit |
| Virginia | $12.77 | $2.13 | Only without a tip credit |
| Washington | $17.13 | No tip credit | Yes |
| West Virginia | $8.75 | $2.62 | Only without a tip credit |
| Wisconsin | $7.25 | $2.33 | Only without a tip credit |
| Wyoming | $7.25 | $2.13 | Only without a tip credit |
Several states also set different rates by region, employer size or role, and many cities have higher minimums; see the notes in the tip pooling calculator or the state guide.
Changes on January 1, 2027
- California $17.40; Colorado $15.71 ($12.69 tipped); Connecticut $17.48 (cash wages unchanged); Maine $15.70 ($7.85 tipped).
- Michigan $15.00 ($6.30 tipped); Minnesota $11.87; Montana $11.20; Nebraska $15.26 ($2.13 tipped).
- New Jersey $16.48 ($6.61 tipped); Ohio $11.40 ($5.70 tipped); Rhode Island $17.00 ($3.89 tipped); Virginia $13.75 ($2.13 tipped); Washington $17.73.
- Arizona, South Dakota and Vermont also adjust each January; their 2027 rates were not yet published when this page was checked. New York stays the same.
States with stricter tip pool rules
- Massachusetts: pools are limited to wait staff, service employees and service bartenders, so no kitchen staff even at full minimum wage, and no managers on a day they manage.
- New York: only food service workers who serve patrons can receive from a required pool, so no cooks or dishwashers.
- Minnesota: employers may not require tip sharing or pools at all; employees may share voluntarily.
- New Jersey: state guidance says pooled tips may not go to non-tipped employees, and no card fees can come out of tips.
- Michigan: the law provides only for voluntary sharing, and official guidance does not say whether a required pool is allowed.
- California: pools only within the chain of service, never owners, managers or supervisors, and no card fees out of tips.
Is the 80/20 rule still in effect?
Not under federal law. In 2024 the Fifth Circuit struck down the Labor Department’s 2021 rule that limited untipped side work to 20 percent of the week or 30 minutes in a row (Restaurant Law Center v. DOL), and the department restored the older 1967 rule, which has no percentage limit: related duties such as setting tables or making coffee count as part of the tipped job, while hours in a separate untipped job do not. Pennsylvania, New York and New Jersey keep their own 20 percent rules.
Credit card fees on tips
Federal guidance allows deducting the actual processing percentage. California, New Jersey, Pennsylvania and Minnesota ban the deduction; Texas requires the employee’s written authorization; New York, Illinois and Washington allow a pro-rated share.
Split tips with the calculators
- Tip pooling calculator: split a pool equally, by hours, points or percentage, with off-the-top shares and the rules panel for every state.
- Tip-out calculator: what a server tips out to bussers, runners and the bar, by sales or by tips.
Tip pooling laws FAQ
Is tip pooling legal?
Yes, under federal law and in most states. An employer can require a pool, but employers, managers and supervisors can never take from it, and with a tip credit it can include only tipped employees. Minnesota bans required pools, and Michigan’s law provides only for voluntary sharing.
Can back-of-house staff be in a tip pool?
Under federal law, only if the employer pays everyone in the pool at least the full minimum wage and takes no tip credit. Massachusetts and New York keep kitchen staff out of pools even then.
Can managers share in a tip pool?
No. Federal law bars employers, managers and supervisors from keeping any part of employees’ tips, including through a pool. A manager can keep only tips for service they provided directly and solely.
Which states do not allow a tip credit?
Alaska, California, Minnesota, Montana, Nevada, Oregon and Washington. Tipped employees there get the full state minimum wage before tips.
Can my employer take credit card fees out of my tips?
Under federal law, only the actual processing percentage, and the tip must be paid by the regular payday. California, New Jersey, Pennsylvania and Minnesota ban the deduction.
Is a service charge a tip?
Not under federal law: a mandatory service charge belongs to the employer, and any part paid to employees counts as wages. Some states, such as New York, Massachusetts and Washington, have rules on who gets it or how it is disclosed.
Federal sources
- 29 U.S.C. § 203 (FLSA definitions, tip credit, tips)
- 29 CFR Part 531, Subpart D: Tipped employees
- US DOL Fact Sheet #15: Tipped employees under the FLSA
- US DOL: Tips
- US DOL: Minimum wages for tipped employees by state
- Restaurant Law Center v. DOL (5th Cir. 2024)
- 89 FR 101884: Restoration of the 1967 dual jobs text
This page summarizes the law for restaurant operators and staff; it is not legal advice. Wages and rules change, and cities can set their own minimums. Check the linked official sources, or ask an employment lawyer, before changing how you handle tips.