Can Employers Require Employees to Pool Tips in Minnesota?

Generally no – employers cannot require employees to pool their tips in Minnesota, but there are a few exceptions to this rule.  Here’s what employer’s need to know about the tip-pooling rules in Minnesota:

General Rule:  The general rule in Minnesota is that “[n]o employer may require an employee to contribute or share a gratuity received by the employee with the employer or other employees or to contribute any or all of the gratuity to a fund or pool operated for the benefit of the employer or employees.”  Minn. Stat. § 177.24, subd. 3.

Voluntary Tip Pools:  The law does not prevent employees from voluntarily sharing gratuities with other employees, provided there is no employer coercion.  If employees decide to share their tips voluntarily, an employer generally cannot participate in the arrangement, except that the employer may:  (i) upon the request of employees, safeguard gratuities to be shared by employees and disburse shared gratuities to employees participating in the agreement; (ii) report the amounts received as required for tax purposes; and (iii) post a copy of Minnesota’s tip-pooling law for the information of employees.  Minn. Stat. § 177.24, subd. 3.

The Banquet Exception:  Another exception to the tip-pooling rule applies to banquets or similar food and cocktail service events.  With respect to this exception, the law states that “[w]hen more than one direct service employee provides direct service to a customer or customers in a given situation such as banquets, cocktail and food service combinations, or other combinations, money presented by customers, guests, or patrons as a gratuity and divided among the direct service employees is not a violation of [Minnesota’s tip-pooling statute].”  Minn. R. § 5200.0080, subp. 8.

Takeaways:  In most cases, employers cannot require employees to share tips in Minnesota.  The two primary exceptions to this rule are:  (i) when employees voluntarily agree to share tips; and (ii) when tips are shared among direct service employees at banquets or similar food and cocktail events.

About Michael Miller

Michael is a Chambers-rated attorney in Briggs and Morgan's Employment, Benefits, and Labor group and is head of the firm’s Employment Law Counseling and Compliance practice group. He has 25 years experience counseling employers to prevent unwanted litigation and advises companies of ongoing changes in federal, state and local employment law. Michael advises employers in all areas of employment law including discipline and discharge, leaves of absence, wage and hour compliance, non-compete and confidentiality agreements, affirmative action plans, background checking, and drug/alcohol testing. For Michael's full bio, click here.

Posted on December 5, 2013, in Wage and Hour and tagged . Bookmark the permalink. Leave a comment.

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