Can managers or supervisors participate in a tip pool in Texas?

No. Under federal FLSA regulations (29 U.S.C. § 203(m)(2)(B) and 29 C.F.R. § 531.54(c)(3)), managers and supervisors are strictly prohibited from receiving any portion of an employee tip pool or retaining employee tips under any circumstances, regardless of whether the employer pays full minimum wage or claims a tip credit.

Can cooks and dishwashers be included in a Texas restaurant tip pool?

It depends on whether the employer takes a tip credit. If the employer claims a tip credit (paying tipped staff $2.13/hr), back-of-house kitchen staff CANNOT participate. If the employer pays all staff at least the full statutory minimum wage ($7.25/hr) in direct cash wages, back-of-house employees may legally participate in a valid tip pool under 2018 FLSA amendments.

Can a Texas restaurant employer keep credit card processing fees from tips?

Under federal FLSA rules and TWC guidance, an employer may deduct only the actual transactional credit card processing fee charged by the processor (e.g., 2.5%) for credit card tips, provided the deduction does not reduce the employee's net wage below minimum wage. Employers cannot deduct arbitrary or flat fees that exceed actual transactional charges.

Texas Tip Pool & Tip-Out Calculator – Restaurant Pooling Rules

Texas Restaurant Tip Pooling Rules: What the Law Requires

In Texas restaurants, bars, and hospitality venues, tip pooling and tip-out arrangements are governed by the Fair Labor Standards Act (FLSA), federal Department of Labor regulations under 29 C.F.R. Part 531, and Texas Workforce Commission (TWC) administrative guidance.

The Critical Distinction: Tip-Credit vs. Full-Wage Employers

Whether non-tipped back-of-house staff (line cooks, prep cooks, dishwashers) can participate in a tip pool depends directly on whether the employer claims a tip credit:

1. When Employer Claims Tip Credit ($2.13/hr base)

Under 29 C.F.R. § 531.54(c)(1), tip pools are strictly limited to employees in "customarily and regularly tipped occupations" (servers, bussers, food runners, bartenders). Back-of-house staff cannot participate. Including a cook or dishwasher invalidates the employer's tip credit across the entire staff.

2. When Employer Pays Full Minimum Wage ($7.25+/hr)

Under the 2018 FLSA amendments and 29 C.F.R. § 531.54(c)(2), if an employer pays all staff at least the full statutory minimum wage ($7.25/hr) in direct cash wages without claiming a tip credit, cooks and dishwashers may participate in a valid tip pool.

Absolute Manager and Supervisor Exclusion (29 U.S.C. § 203(m)(2)(B))

Under federal law, managers, shift supervisors, and assistant managers can NEVER receive money from an employee tip pool, regardless of whether a tip credit is claimed or what hourly wage is paid. An employer or supervisor who retains or takes a portion of employee tips violates federal law and may be liable for 100% of tips taken plus statutory liquidated damages and civil money penalties.

Need In-Depth Legal Analysis?

Read our full guide covering point-weighting systems, credit card fee deductions, and server rights.

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Texas Restaurant Tip Pool & Tip-Out Calculator