Tip Sharing, Pooling and Credits: Employee Rights in Minnesota

Service employees, including wait staff, bartenders and other staff are often at the whims of their employers when it comes to tipping policies. In a competitive job market, many employees may not fully understand their rights or be afraid to stand up to employers when they are forced to turn over tips.

Nationwide, many service positions involve sharing or pooling tips—“tipping out” other members of the staff. While some of these policies are legal in other states, Minnesota has a very specific approach to tipping law. Employers can be held liable if their tip policies violate federal or state wage and hours laws.

Can my employer count tips against minimum wage requirements?
No, employers are prohibited from taking a tip credit against minimum wage. Minimum wage law applies to all full and part-time workers. Employers may not count tips as part of minimum wage payment. Employees who are covered by federal minimum wage law are owed $7.25 per hour in addition to tips.

My employer requires all employees to pool or share tips—is this legal?
In the state of Minnesota, no employer may require employees to share their gratuities or to contribute gratuities to a fund or pool. Tips are the sole property of the direct service employee and employers cannot require employees to turn over tip earnings or to share tips with other employees. However, tips can be divided between employees when more than one direct employee services a customer. This may be applicable in banquet services and other scenarios where a tip was intended for multiple employees.

Is it legal for my employer to require that employees turn over our tips for redistribution?
Under Minnesota law, individuals who perform the direct service should benefit directly from the gratuities paid. Minnesota courts have stated that tips belong to the employees and service workers cannot be forced to share their earnings.  If employees agree to share tips without employer participation or coercion, an employer may safeguard shared gratuities to be redistributed, but only for those employees who agree to share. When these amounts are turned over, the employer can report the amounts received as gratuities for tax purposes.

I don’t want to pool my tips, but I don’t want to lose my job—what can I do?
Minnesota courts have stated that pooling or sharing gratuities, “may not be a condition of employment.” Workers who feel coerced or pressured to participate in tip sharing can take legal action to protect their rights and earnings. Any employee who refuses to share tips and is harassed or coerced into participation should consult with an experienced wage and hour law attorney. Such policies could result in liability for employers and damages for employees.

If you are a Minnesota employee and have been forced to pool or share your tips, our attorneys are interested in discussing your case. Employees who have been forced to “tip-share” or pool tips may be entitled to a claim for damages. For more information about tip pooling and sharing in Minnesota, please contact our wage and hour attorneys at Baillon Thome Jozwiak & Wanta by calling 612-252-3570. You can also refer to the Minnesota Department of Labor and Industry’s guide to Minnesota’s tip laws.