Tips can make all the difference if you work in food or hospitality. Countless servers, food runners, baristas, bartenders, hotel workers, and salon workers rely on tips to help pay for essentials. Unfortunately, management and business owners can abuse their power to illegally take tips or pocket a percentage of tips from food and hospitality workers.
You earned those tips, and our New York wage and hour lawyers are here to help you get what you’re owed. Let’s review some basics about tip theft, tip pooling, and the tip credit. We’ll then share some examples of tip violations and let you know what to do if your boss or company has been stealing tips from you.
The Bell Law Group is on your side. If you are a hospitality or restaurant worker who’s owed tips, contact our New York employee rights law firm today. All consultations are free and completely confidential.
Key Takeaways:
- Tip theft is any act in which an employer or management deprives an employee of the tips that the employee earned during their shift. Even taking a percentage of the employee’s tips is a form of tip theft.
- Tip pooling is when employees pool their tips to be distributed among all customer-facing employees. Tip sharing is when a customer-facing employee gives a percentage of their individually earned tips to support staff (e.g., bartenders, bussers).
- The tip credit allows certain employers to pay an hourly rate below the minimum wage as long as the employee’s tips make up the difference. If combined cash and tips do not equal the minimum wage, employers must cover the difference.
- Examples of tip violations include an employer taking all or a percentage of the tips, deducting credit card processing fees from credit card tips, deducting tips from customers who walk out, deducting tips due to broken glasses or plates, and forcing tips to be shared with managers or supervisors.
- If you believe you are the victim of tip theft, assemble all relevant documentation and contact an employment law attorney ASAP.
What Is Tip Theft?
Broadly speaking, tip theft occurs when an employer takes employee tips, keeps employee tips, or redirects employee tips in a way not permitted by federal and state labor laws.
Note that under the Fair Labor Standards Act (FLSA), a tipped employee is a worker who regularly receives at least $30 in tips every month.
We’ll provide some examples of tip theft and tip violations in a moment, but for now know that employers have some creative and underhanded ways of stealing tips from employees.
Tips Belong Solely to Employees, Not Management or the Employer
In New York, tips belong to the employee who earned those tips. Both federal law and New York State laws protect tips for employees.
The tips earned do NOT belong to management, supervisors, or the employer.
If you work in the food or service industry, you need to remain aware of what is happening to your tips.
Who Qualifies as a Supervisor or Manager Under the Law?
According to the FLSA Fact Sheet regarding tips, a manager or supervisor is:
- Someone who regularly directs the work of two or more full-time employees or their equivalent
- Someone who has hiring, firing, and promotion/advancement authority over other co-workers
- Someone whose primary duty involves management of the business or a department/division of said business
What Is Tip Pooling?
Tip pooling is when tipped employees put a percentage or all of their tips into a common pool for tipped employees at the business. The tip pool is then redistributed to eligible workers.
Tip pools are legal in the state of New York. The exact distribution of pooled tips can vary from business to business.
Who Can Be Included in a Tip Pool?
For most food service and hospitality jobs, the following employees can receive tips from the tip pool:
- Servers
- Bussers
- Food runners
- Bartenders
- Room service
- Car wash attendants
As with traditional tips, the funds in a tip pool are only for eligible employees, NOT management, supervisors, or the employer.
What Is Tip Sharing? How Is It Different from Tip Pooling?
In tip sharing, customer-facing employees who earn tips keep all of their tips. That tipped employee then shares a percentage of their own tips with support staff for their contributions to good service.
For example, say that a server at a restaurant makes $200 in tips one night. As part of tip sharing, that server would then share a predetermined percentage of their tips with the bartender, the bussers, and food runners.
Are Kitchen/Back-of-House Employees Eligible for Tip Pooling or Tip Sharing?
No, tips are usually not given to or shared with back-of-house employees.
Generally speaking, tips tend to be reserved for employees who provide direct customer service as part of their job. Cooks, prep cooks, and dishwashers tend not to receive tips just given the nature of their job.
What Is the Tip Credit?
A tip credit is a law that allows certain employers to pay an hourly rate below the minimum wage as long as the employee’s tips make up the difference.
For example, the New York City minimum wage in 2026 is currently $17 per hour. If an NYC employee earns $5 an hour in tips, their employer can pay $12 per hour.
New York State’s Minimum Hourly Rate with the Tip Credit
While there are federal laws related to the tip credit, New York has progressive and protective laws for workers who get tips.
If you are in a profession that regularly receives tips, here are the minimum hourly rates from the New York State Department of Labor for 2026:
- Food Service Workers
- New York City: $11.35 cash wage; $5.65 tip credit
- Long Island and Westchester County: $11.35 cash wage; $5.65 tip credit
- The Rest of New York State: $10.70 cash wage; $5.30 tip credit
- Service Employees
- New York City: $14.15 cash wage; $2.85 tip credit
- Long Island and Westchester County: $14.15 cash wage; $2.85 tip credit
- The Rest of New York State: $13.30 cash wage; $2.70 tip credit
Employers Are Required to Give Notice of a Tip Credit
In the state of New York, employers must notify employees of the tip credit before they start employment.
Employers can be held legally accountable for failing to notify or refusing to notify prospective employees about the tip credit.
Employers Must Ensure Employees at Least Make Minimum Wage
If at the end of the day the employee’s hourly pay with tips does not meet the state minimum wage, the employer must make up the difference.
For example, say that a server is paid $11.35 an hour. It’s been a slow week at work, and the server only makes $4 an hour in tips. The server’s employer must cover $1.65 an hour so the server at least makes minimum wage for the hours worked.
What Happens When Employers Violate Tip Credit Laws?
When employers do not abide by tip credit laws, they could face multiple consequences. Most notably, the employer will lose the tip credit, which means employees must be paid the full minimum wage.
Employers who violate tip credit laws will also be required to pay any unpaid wages or return any tips to the employee.
What Are Some Examples of Tip Theft and Tip-Sharing Violations?
Here are some examples of tip theft and other violations that involve tips.
Directly Stealing Tips or a Percentage of Tips
If management or your bosses take all of your tips or pocket some of your tips, this is not allowed. In some cases, employers may take all of an employee’s tips.
Illegal Deductions on Tips
Some employers may charge employees their tips illegally. This includes deductions for broken plates, customers who walk out on bills, deducting credit card processing fees from credit card tips, and charging vague “house fees.”
Tip Credit Violations
Employers may violate tip credit laws in various ways, including failure to pay a minimum hourly wage, failure to cover employee pay when cash and tips fall short of the minimum wage, and failure to inform employees of the tip credit prior to hiring.
Illegal Tip Pooling or Sharing Practices
Employers may violate state tip pooling or tip sharing laws in all kinds of ways. Examples include forcing employees to pool tips and distribute them to management, compelling employees to tip share with ineligible employees, and having inconsistent practices regarding tip pooling (especially when this is detrimental to employees).
Retaliation for Asking About Tips
In addition to explicit tip theft and tip violations, some employees may face different kinds of retaliation for simply asking about their tips. This could include demotions, refused time off, shift changes, and even termination.
How Do I Recover Stolen Tips from Work?
If you believe that your tips have been taken from you or that you are not being paid fairly as a tipped employee, you need to contact a New York employment law attorney as soon as possible. A lawyer can help seek the tips you’re owed, back pay, and even liquidated damages.
How to Document Tip Theft and Other Tip Violations
Good evidence makes all the difference in employment law cases. Before you reach out to a lawyer, we encourage you to compile the following documents and materials:
- Track All of Your Tips: Keep track of all of your tips earned at your job. Note the amount you earned, how much you are paid out, and any discrepancies.
- Save All of Your Paychecks and Stubs: A paper trail is crucial. Hold on to your paychecks and pay stubs. These can show how much you got in tips (or were supposed to get in tips) as well as any issues with your hourly pay.
- Document Tips Policies at Work: Make sure you have a copy of your company’s tip policies. This is another way to ensure your employer is abiding by the law.
- Take Note of All Activity Regarding Tips: If you or other co-workers have issues with getting tips, getting tipped out, or with how tips are pooled, be sure to take note of this. Include the date and details of what happened.
- Retain All Work Communications: Keep copies of all communications with your employer regarding pay, tips, hours, and anything that seems relevant. This can be helpful while building your case.
Why New York Workers Trust The Bell Law Group
Founded in 2002, The Bell Law Group supports workers. You want what’s fair, and so do we. Our firm chooses cases carefully, which means we determine if your tip violation case has merit. We’re committed to standing up for your rights in the food or hospitality industry and finding the best path to success.
We Focus on Employment Law
Some law firms are spread thin handling different kinds of cases. That’s not the case at The Bell Law Group. Our attorneys focus on employment law and the rights of workers. Our lawyers represent New Yorkers as well as federal employees all over the country.
Our law firm is prepared to take on all kinds of pay disputes, including back pay for agreed-upon wages, wage theft by employers in various forms, and gender-based equal pay issues.
Our Lawyers Have Over 100 Years of Combined Experience
The attorneys at The Bell Law Group have more than 100 years of combined experience advocating for workers. Our employment law attorneys have fought for service industry and hospitality workers in Nassau County, Suffolk County, and New York City. We’ve also represented federal workers in cases nationwide.
Members of our team have been featured in the Wall Street Journal and have made appearances on numerous news affiliates throughout New York.
We Have a Record of Fighting for Workers
For over two decades, The Bell Law Group has fought for working people on Long Island, in New Yorker City, and all over New York State. In one of our past cases, we successfully represented multiple restaurant workers that were paid in tips only. They were not even provided a base salary equal to the minimum wage. In addition to getting back pay, we also helped these workers get compensated for unpaid overtime.
We encourage you to look at our employment law case results to get a sense of what we’ve been able to achieve for hard-working New Yorkers just like you.
We Offer Free and Confidential Consultations
A lot of workers are afraid of speaking with an attorney. They’re worried about the cost of meeting an employment lawyer. They are also afraid that the information they share could get leaked and jeopardize their employment and regular source of income.
The Bell Law Group provides workers with free and confidential case evaluations with no obligation. You pay nothing to discuss your situation at work, and all details we discuss will remain private.
Need Help Retrieving Stolen Tips? Contact The Bell Law Group
If your boss or management is pocketing your tips, we want to hear about it. You deserve the money you’re owed, and The Bell Law Group can help ensure you are paid fairly. For a free and completely confidential case review, contact our New York workers rights law firm.
