Can Your Employer Keep Your Tips?

The federal wage law is the Fair Labor Standards Act (FLSA). Since 2018 it has contained this sentence, at 29 U.S.C. § 203(m)(2)(B): “An employer may not keep tips received by its employees for any purposes, including allowing managers or supervisors to keep any portion of employees’ tips, regardless of whether or not the employer takes a tip credit.” The last clause matters: the ban protects a server paid $2.13 an hour and a barista paid $17 an hour alike. Labor Department regulations list the only things an employer may do with your tips (29 CFR § 531.52): hand them to the employee who earned them, require employees to share them in a tip pool that follows the rules, or count them toward the minimum wage through the tip credit. Federal law lets an employer pay a tipped employee a cash wage as low as $2.13 an hour and count up to $5.12 an hour of tips toward the $7.25 federal minimum wage. That is allowed only if the employer explained the rules in advance. If your tips do not bring you to $7.25, the employer has to make up the difference. State law can be stricter. The Labor Department’s state table lists Alaska, California, Minnesota, Montana, Nevada, Oregon and Washington as requiring the full state minimum wage before tips. Others set a higher cash wage, limit who can share a pool, or ban the card-fee deduction.

How six states handle tips, as of October 2026:

• California — Labor Code § 351, as explained by the state Labor Commissioner: tips belong to the employees who received them. There is no tip credit, so the full state minimum wage ($16.90 in 2026) is owed before tips, and card-fee deductions are not allowed. Owners, managers and supervisors may not share in a pool.
• New York — Labor Law § 196-d bars an employer or its agents from demanding or accepting any part of an employee’s gratuities, or keeping any charge “purported to be a gratuity.” A tip credit is allowed in hospitality: a New York City food service worker must get at least $11.35 in cash, with a tip allowance of up to $5.65 toward $17.00. Rates differ by region.
• Illinois — 820 ILCS 115/4.1: “Gratuities to employees are the property of the employees, and employers shall not keep gratuities.” A proportionate card-fee deduction is allowed. The tip credit is capped at 40 percent of the $15.00 minimum, leaving a $9.00 cash wage.
• Florida — the state constitution set the minimum wage to reach $15.00 on September 30, 2026, and employers may count up to $3.02 an hour of tips toward it. The Labor Department’s state table, last revised July 1, 2026, still shows the earlier figures (a $10.98 cash wage on a $14.00 minimum), so confirm the current tipped rate with FloridaCommerce, the state agency that publishes it. Fla. Stat. § 448.110 requires written notice to the employer and 15 calendar days to pay before a state-law suit.
• Texas — Texas Labor Code § 62.052 adopts the federal tipped-wage rule, so the numbers are the federal ones: a $2.13 cash wage and a tip credit of up to $5.12 toward $7.25. The federal ban on keeping tips applies.
• Massachusetts — G.L. c. 149, § 152A: tips and service charges may be shared only among wait staff employees, service employees and service bartenders, and no one with managerial responsibility qualifies. The tipped cash wage is $6.75 on a $15.00 minimum.

To check your own state, search your state labor department’s website for “tipped minimum wage” and “tip pooling,” or start with the U.S. Labor Department’s state table linked in Sources.

What to do if your employer is keeping your tips:

1. Track your tips every shift. Write down the date, hours, cash tips, card tips, and what you paid into a pool.
2. Keep every pay stub. For each workweek, add cash wages and tips and divide by hours. A result under $7.25, or your state’s higher rate, means your employer owes the difference.
3. Ask for the tip pool policy in writing. When an employer takes a tip credit, the federal regulation requires it to tell you the required contribution.
4. Raise the problem in writing. Send a short, polite message to the owner or general manager and keep a copy.
5. File a complaint. Call the U.S. Labor Department’s Wage and Hour Division at 1-866-487-9243 or use its complaint page. The agency says it does not disclose who complained. Your state labor agency takes complaints under state law.
6. Watch the deadline. A federal claim must be brought within two years of the violation, or three years if it was willful (29 U.S.C. § 255(a)). State deadlines differ, so do not wait.

The edges to watch as of October 2026:

1. The tips tax deduction is temporary. The IRS describes it as applying to tax years 2025 through 2028. It changes how tips are taxed, not who owns them.
2. Side work at the tipped wage. A 2021 Labor Department rule on untipped side work was vacated by a federal court in 2024, and in December 2024 the Department restored the earlier “dual jobs” regulation. States can set their own limit: New York bars the tip credit when a hospitality worker spends more than two hours, or 20 percent of the shift, on non-tipped duties.
3. State tipped wages change on set dates. California’s rate took effect January 1, 2026, and Florida’s constitution set a step to $15.00 on September 30, 2026. Check your state’s current figure.

When these move, this article gets updated.