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Can your Indiana employer keep your tips?

On Behalf of | Jun 1, 2023 | Blog, Wage & Hour Laws

Tips are an important source of income for many individuals working in industries such as food service, hospitality and personal care. In Indiana, as in other states, there are laws in place to protect employees’ rights to their tips.

Learn more about whether your Indiana employer can keep your tips.

Understanding tip pooling

Tip pooling is a common practice in many establishments where employees pool their tips together and then distribute them among the staff. While you can tip pool under certain circumstances, it is essential to understand that there are specific guidelines that employers must follow to ensure compliance with the law.

Indiana tip law

The Indiana Code, specifically Section 22-2-9-1, states that tips are the property of the employee who receives them. Employers cannot retaining or distribute any part of the tips for themselves or for any purpose other than the benefit of the employees.

Service charges and mandatory tips

It is important to note that there is a distinction between voluntary tips and service charges or mandatory gratuities. Service charges or mandatory tips that are automatically added to a customer’s bill and then distributed to employees are not considered tips under Indiana law. In such cases, the employer may have more discretion in how they distribute these funds.

Legal recourse

If you believe that your employer is unlawfully keeping your tips or improperly distributing them, you may have legal recourse. It is advisable to consult with the Indiana Department of Labor to understand your rights and explore potential remedies.

In Indiana, your employer should allow you to keep the tips you have earned. Be proactive if you feel you are being unfairly treated.


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