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Is ‘tip pooling’ legal in Indiana?

On Behalf of | Mar 11, 2021 | Wage & Hour Laws

Restaurant workers and servers in Indiana rely on tips to supplement their wages. Questions do arise, though, regarding the minimum wage for service workers and whether “tip pooling” is allowed. The following is a brief overview of these topics.

Minimum wage for tipped employees

Under Indiana law, tipped employees, like other employees in Indiana, have the legal right to be paid the minimum wage. In Indiana, employers must start by paying tipped employees at least $2.13 an hour. If, after adding in tips, the tipped employee has not been paid the minimum wage, it is the employer’s responsibility to pay employees the difference. Tipped employees are those who regularly receive over $30 monthly in tips through their job.

Tip pooling in Indiana

In Indiana, in general employers are allowed to “pool” tips earned by employees and distribute them among certain workers, such as front of house workers. This ensures everyone in the customer service chain share in the gratuity. Under Indiana law, gratuities are any monies paid, given or left for a worker by a patron of the business that is in excess of what was owed for services rendered or goods served. Tip pools can be either voluntary or mandatory.

Tip pooling is permissible as long as those sharing in the tips contributed to the chain of service given to the patron who paid the tip. In addition, the employer cannot keep any part of the tips, and tips in a tip pool must be distributed in a way that is fair and reasonable.

Mishandling of tips can lead to wage and hour violations

If you believe your employer has wrongfully withheld wages from you because you were tipped or if you believe your employer is wrongfully handling a tip pool, you may want to determine what your rights are. In some cases, these may be wage and hour violations for which you can be compensated. This post is for educational purposes only and does not contain legal advice. Those who want to learn more about wage and hour violations may find our firm’s website to be of interest.



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