A busy Saturday night was spent at a resort’s luxury restaurant. Alex, Assistant Restaurant Manager and short-staffed, took on the task of bussing, taking drinks orders, and restocking drinks. Guests were happy, and the team appreciated Alex’s effort—but when tips were pooled at the end of the shift, a server hesitated: Can Alex take a share of the tips?” Is he not in management?
This situation is not unique. When managers jump into the hospitality industry to fill in for staffing shortages, they must know when they can legally split tip pools.
The Department of Labor – Wage and Hour Division (WHD) recently issued an opinion letter This document clarifies who is eligible to join tip pools under Fair Labor Standards Act. Hotel and resort managers must be aware of the following to ensure compliance.
The Department of Labor’s Opinion: Key Takeaways
The WHD’s Opinion Letter The answer to a commonly asked hospitality question is yes. The answer is: The classification of the employee and their primary duties will determine how they are classified.
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Different employee classifications
- Hourly, Non-Exempt Supervisors Can Participate
Supervisors and shift leaders are hourly paid for performing primarily nonmanagerial tasks. Can you imagine? participate in tip pools—even if they’re the most senior employee during a shift. - Exempt/Salaried managers cannot participate
Managers classified as exempt—those whose primary duties include managing staff, scheduling, and decision-making—You can’t. No matter how little supervision they do during a shift, they can still get tips from the tip pool. - The job title does not determine eligibility
Job titles like “Manager” or “Lead” don’t matter—what matters is what the employee actually does during the workweek. They are classified under the FLSA based on what they do. Primary Duty Not the specific tasks that they performed in a particular shift, but over time. - No manager-only tip pools
The FLSA prohibits tip pools that are composed only of supervisors and managers. They would also violate the FLSA rule, which states that managers can’t keep a portion of tips from other employees.
Hotel and Resorts: Practical Implications
We have all seen it…F&B operations In times of high pressure, managers may step into non-supervision roles. What you need to do to ensure compliance Managers and HR teams Should you do?
- Classifications for AuditsReview the primary duties of supervisors and managers to determine if they are exempt from taxation or not.
- Clarify Tip Pool PoliciesCommunication of clear guidelines on who can participate in tip pools.
- Train SupervisorsIt is important to educate your leadership team on these rules, so that they do not inadvertently break FLSA regulations.
Alex’s dilemma: Can the restaurant manager accept tips?
Recall Alex, the assistant restaurant manager. He spent Saturday doing line-level work, but his main job during the week involves managing staff and supervising operations. Under the FLSA, Alex is classified as an exempt manager, meaning he cannot legally take tips from the pool—even if he worked just as hard as the servers that night.
Alex, on the other hand, could be a Shift Lead who is paid hourly and whose role is primarily customer service. He would then be eligible for the tip pool. The distinction is based on Alex’s FLSA classification and not the tasks that he performed.
Why this matters; it is more than compliance
For hospitality leaders, this is more than just a compliance issue—it’s about fairness and protecting your team from potential disputes. Tipping pool policy mistakes can result in financial penalties and damage employee confidence.
