C.F.R. » Title 29 » CHAPTER V—WAGE AND HOUR DIVISION, DEPARTMENT OF LABOR › SUBCHAPTER A—REGULATIONS › PART 531—WAGE PAYMENTS UNDER THE FAIR LABOR STANDARDS ACT OF 1938 › Subpart D—Tipped Employees

29 C.F.R. § 531.54

Tip pooling

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(a) Monies counted as tips. Where employees practice tip splitting, as where waiters give a portion of their tips to the busser, both the amounts retained by the waiters and those given the bussers are considered tips of the individuals who retain them, in applying the provisions of sections 3(m)(2)(A) and 3(t). Similarly, where an accounting is made to an employer for his or her information only or in furtherance of a pooling arrangement whereby the employer redistributes the tips to the employees upon some basis to which they have mutually agreed among themselves, the amounts received and retained by each individual as his or her own are counted as his or her tips for purposes of the Act. Section 3(m)(2)(A) does not impose a maximum contribution percentage on mandatory tip pools.

(b) Prohibition against keeping tips—(1) Meaning of “keep.” Section 3(m)(2)(B)'s prohibition against keeping tips applies regardless of whether an employer takes a tip credit. Section 3(m)(2)(B) expressly prohibits employers from requiring employees to share tips with managers or supervisors, as defined in § 531.52(b)(2), or employers, as defined in 29 U.S.C. 203(d). An employer does not violate section 3(m)(2)(B)'s prohibition against keeping tips if it requires employees to share tips with other employees who are eligible to receive tips.

(2) Full and prompt distribution of tips. An employer that facilitates tip pooling by collecting and redistributing employees' tips does not violate section 3(m)(2)(B)'s prohibition against keeping tips if it fully distributes any tips the employer collects no later than the regular payday for the workweek in which the tips were collected, or when the pay period covers more than a single workweek, the regular payday for the period in which the workweek ends. To the extent that it is not possible for an employer to ascertain the amount of tips that have been received or how tips should be distributed prior to processing payroll, tips must be distributed to employees as soon as practicable after the regular payday.

(c) Employers that take a section 3(m)(2)(A) tip credit. When an employer takes a tip credit pursuant to section 3(m)(2)(A):

(1) The employer may require an employee for whom the employer takes a tip credit to contribute tips to a tip pool only if it is limited to employees who customarily and regularly receive tips; and

(2) The employer must notify its employees of any required tip pool contribution amount, may only take a tip credit for the amount of tips each employee ultimately receives, and may not retain any of the employees' tips for any other purpose.

(3) An employer may not receive tips from such a tip pool and may not allow managers and supervisors to receive tips from the tip pool.

(d) Employers that do not take a section 3(m)(2)(A) tip credit. An employer that pays its tipped employees the full minimum wage and does not take a tip credit may impose a tip pooling arrangement that includes dishwashers, cooks, or other employees in the establishment who are not employed in an occupation in which employees customarily and regularly receive tips. An employer may not receive tips from such a tip pool and may not allow supervisors and managers to receive tips from the tip pool.

[85 FR 86789, Dec. 30, 2020, as amended at 86 FR 52986, Sept. 24, 2021]
Notes of Decisions
Cited in 52 cases (28 in the last 5 years), 1979–2025 · leading case: Kubiak v. S.W. Cowboy, Inc.
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Kubiak v. S.W. Cowboy, Inc. (2016) flmd · cites it 2× “” Title 29 C.F.R. § 531.54 then explains how an employer must account for tips in applying sections 203(m) and 203(t).”
Eric Myers, Jimmy Underwood, Michelle Grundorf v. The Copper Cellar Corporation (1999) ca6 · cites it 2× “4 See 29 C.F.R. § 531.54 (recognizing that bus boys who assist servers but who customarily do not directly receive diner-donated gratuities may properly be included in an employer-mandated tip pool).”
White v. 14051 Manchester Inc. (2014) moed · cites it 3× “See 29 C.F.R. § 531.54 (“[W]here an accounting is made to an employer for his information only or in furtherance of a pooling arrangement whereby the employer redistributes the tips to the employees upon some basis to which they have mutually agreed among themselves, the amounts…”
Trinidad v. Pret A Manger (USA) Ltd. (2013) nysd “Tracking the statutory language quoted above, DOL's regulations provide that a valid tip pool "can only include those employees who customarily and regularly receive tips,” 29 C.F.R. § 531.54 , and that, with the exception of tips contributed to such a valid tip pool, "the tip…”
Arencibia v. 2401 Restaurant Corporation (2011) dcd · cites it 3× “See 29 C.F.R. § 531.54 . That Ms. Albert’s and Mr.”
Gionfriddo v. Jason Zink, LLC (2011) mdd “29 C.F.R. § 531.54 . However, “[i]f tipped employees are required to participate in a tip pool with other employees who do not customarily receive tips, then the tip pool is invalid and the employer is not permitted to take a ‘tip credit.”
Davis v. B & S, INC. (1998) innd · cites it 3× “See also 29 C.F.R. § 531.54 (1998); Field Operations Handbook § 30d04(b); Employ.”
Kilgore v. Outback Steakhouse of Florida, Inc. (1998) ca6 · cites it 4× “” 29 C.F.R. § 531.54 (1996); see also Marshall v.”
Driver v. AppleIllinois, LLC (2012) ilnd “Those two provisions of Section 203(m) led to different regulations: the dual jobs regulation quoted above, and the tip pool regulation ( 29 C.F.R. § 531.54 ), which says that “valid mandatory tip pools .”
Lentz v. Spanky's Restaurant II, Inc. (2007) txnd “1978) (finding that waiters, bus persons, and bartenders were permitted to derive their tip income from a tip pool); 29 C.F.R. § 531.54 (noting tip pools may include employees such as busboys).”
Hai Ming Lu v. Jing Fong Restaurant, Inc. (2007) nysd “54 (2007) (defining a permissible “pooling arrangement” as one where “the employer redistributes the tips to the employees upon some basis to which they have mutually agreed among themselves .... ”). Here, plaintiffs offered evidence that through influence over the “Black…”
Johnson v. VCG Holding Corp. (2012) med · cites it 4× “§ 203 (m); 29 C.F.R. § 531.54 . If the entertainers are independent contractors, the money from the entertainers to the emcees constitutes a tip.”
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