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 cleaning tables. 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 a manager?
This isn’t a unique scenario. 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 The Fair Labor Standards Act (FLSA) clarifies this issue by defining who is eligible for tip pools. What hotel and resort managers should know to remain compliant.
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 yes. What is the primary duty of an employee? This depends on their classification and how they are classified.
Different Employee Classifications
- Hourly, Non-Exempt Supervisors Can Participate
Hourly-paid supervisors or shift leaders who perform non-managerial duties (e.g. taking orders, cleaning the tables). 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. Take tips from a pool of tips, regardless of how much nonsupervisory work is performed during a day. - 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-supervisory positions. 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 a restaurant manager accept tipping?
Recall Alex, the assistant restaurant manager. While he performed line-level duties on Saturday, his main duty during the week is to manage staff and oversee 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 if he were a Shift Lead who worked hourly and whose role was primarily customer service based, could also participate in tip pool. It is his FLSA classification that determines the distinction, not what he did on the evening.
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. Incorrect tip pool policies may result in financial penalties or damage employee trust.
