The Fair Labor Standards Act’s tipping rules can appear byzantine to an outside observer and have resulted in a large volume of litigation in recent years. In another recent opinion letter, the Department of Labor advised hospitality industry employers about a specific tipping issue involving managers or supervisors.

Under the FLSA, supervisors are generally prohibited from participating in tip pools or otherwise retaining a portion of servers' tips. DOL recognizes an exception to this rule for managers who directly and solely serve customers. In opinion letter FLSA2026-13, the employer asked whether managers who are also serving customers during their shifts can participate in pooled tips contributed by other non-manager servers.

In response, DOL confirmed that such supervisors are not eligible to participate in tip pools. Section 3(m)(2)(B) of the FLSA directly prohibits the manager from receiving any portion of other employees' tips, regardless of whether that employee also performs service duties or assists other tipped workers. The supervisor may retain tips directly provided to them by customers they serve, but cannot share in pooled tips.

Employers should carefully monitor and observe these tip pooling rules. Violating these requirements can result in costly class or collective action lawsuits seeking reimbursement of shared tips, liquidated damages, and attorneys' fees.

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