No. Is tip out required by law? Not by any federal law, and not by most states. Nobody in Congress wrote a rule saying a server must hand 10 percent of tips to the bar. But that answer confuses people, because the useful question is different: is your employer allowed to require a tip-out? Usually yes.
The Fair Labor Standards Act treats tips as the employee's property from the moment the customer leaves them. The employer cannot keep any portion, cannot skim the pool, and cannot put a manager or supervisor in it. Inside those walls, the house can set up a mandatory tip pool or tip-out policy, and refusing to participate is treated like refusing any other lawful work rule. The Department of Labor's 2024 final rule on tip pooling kept this structure and clarified the boundaries.
Voluntary tip-outs sit outside all of this. If the house does not require it and you hand the busser cash because the section ran smooth, that is your money and your call. The legal machinery only engages when the tip-out is mandatory, which is also why houses that want a pool put it in writing: a written policy is what makes it enforceable, and its absence is what makes it a gift.
Two servers, two states, same Friday night. In Texas, a server earns the $2.13 federal tipped cash wage, the house takes a tip credit, and the mandatory pool may include only employees who customarily and regularly receive tips: servers, bartenders, bussers, hosts. The dishwasher cannot be in that pool. In California, where the tip credit is banned and the server gets the full state minimum wage from the house, the same employer can legally include the cook and the dishwasher. Same job, different map. Seven states ban the tip credit outright: California, Washington, Oregon, Nevada, Montana, Minnesota, and Alaska.
Is tip out required by law? The three federal lines that matter
First, managers are out. In September 2026 the DOL's Wage and Hour Division issued opinion letter FLSA2026-13: a shift supervisor who also works bartending shifts cannot receive coworkers' tips through a mandatory pool. If the executive-duties test makes someone a manager, stepping behind the bar does not buy them back into the pool. Tips earned directly from a customer they alone served are the narrow exception.
Second, the math has to be visible. Tips collected must be distributed in full by the regular payday, and the house must notify tipped employees of the tip-credit terms before taking the credit. Credit card processing fees can come out of tips, but they cannot push anyone's pay below minimum wage. If your tip-out is verbal, unwritten, or the numbers never add up, that is the part worth questioning.
The percentage itself has no federal cap. Ten percent of tips, 3 percent of sales, whatever the house sets: the FLSA does not bless or ban a number. State law can add rules, and some states require the policy in writing, but the size of the cut is a house decision inside the legal walls described above.
Third, violations are priced to hurt. The DOL can assess up to $1,162 per violation, even for a first-time mistake. In March 2026, Perry's Steakhouse was ordered to pay more than $21 million after its pool fed employees who did not customarily receive tips. That was a pool design error rather than theft, and it still cost $21 million.
Texas adds a useful gloss that courts elsewhere have echoed: the state's guidance says tip-sharing is permissible when the people sharing in the tips participated in serving the customers who left them, which is why written house policies matter. The policy should name the percentage, the recipients, and whether it is mandatory. When it does not, disputes start.
So the server staring at the tip-out envelope has a clearer position than it feels like. The house can require the tip-out. It cannot send it to the wrong people, cannot take a cut, and cannot hide the math. Want to see your own shift? The Tip-Out Calculator splits a night's tips by role and shows where every dollar lands. And if the envelope goes somewhere it should not, the DOL's Wage and Hour Division takes complaints at 1-866-487-9243. Perry's learned the price of bad pool design. Ask where your money goes before someone else pays to find out.
Frequently asked questions
Can my employer force me to tip out?
Yes. A mandatory tip pool or tip-out policy is legal under the FLSA if it follows the federal rules, and refusing to participate can be treated like refusing any other lawful work rule.
Can managers take part of my tips?
No. Managers and supervisors can never receive distributions from a mandatory tip pool, even when they work tipped shifts. They may only keep tips from customers they directly and solely served.
Is there a maximum tip-out percentage?
No federal cap exists on what employees must contribute to a valid tip pool. The percentage is set by the house; state laws may add requirements such as a written policy.
Can servers be required to tip out the kitchen?
Only if the employer pays the full minimum wage and takes no tip credit. When the employer takes the tip credit, a mandatory pool may include only employees who customarily and regularly receive tips.
What if my tip-out goes to the owner?
Employers can never keep any portion of employee tips, directly or through a pool. That is a violation you can report to the DOL's Wage and Hour Division at 1-866-487-9243.
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