The U.S. Department of Labor has issued an Opinion Letter that a “shift supervisor” who also works as a bartender or assists other employees (i.e., hosts and bussers), cannot keep a portion of other employee’s tips through tip pooling. The Opinion Letter provides important guidance regarding the Fair Labor Standards Act (FLSA) and its prohibition against management and owners stealing tips from restaurant workers.
According to the Department of Labor’s September 7, 2026, Opinion Letter, federal law prohibits a supervisor or manager from receiving any portion of employees’ tips, even when the supervisor or manager also performs tipped work. Whether an employee qualifies as a prohibited “manager or supervisor” depends on the employee’s actual duties—not job title—and generally requires that the employee’s primary duty be management, that the employee regularly direct at least two full-time employees, and that the employee have hiring or firing authority or recommendations given particular weight. The definition also includes employees who own at least a bona fide 20% equity interest in the enterprise and actively participate in its management.
A supervisor may, however, retain any tips received directly from customers for service he provides “directly and solely.” For example, when a supervisor tends the bar, the employee may keep tips left by his bar customers during the period in which he is bartending. There, the tips are left for the services the employee solely and directly provided. If, however, the employee’s tips and other bartenders’ tips are consolidated and split among all bartenders working that shift, the tips cannot be attributed solely to the supervisor, and therefore, the supervisor is not permitted to take any additional portion of those tips.
The Department of Labor provided the following examples to illustrate these principles.
Example #1: During a busy period, the restaurant manager pitches in to help servers and bussers serve the restaurant’s customers. The restaurant manager may not keep any portion of the tips the customers provide to the servers or bussers because it is not possible to attribute the tips solely to the service she provides. If, however, she covers a few tables because a server called out sick, she may keep the tips given to her by customers at those tables for services that she performed.
Example #2: An employee works at a coffee shop with a tip jar and point-of-sale system
that allows for customer tipping. Though designated a barista by his employer, who is the owner of the shop but often travels to other coffee shops for many weeks at a time and is rarely onsite, the employee regularly directs the work of the coffee shop staff. This includes assigning work to cashiers, bussers, and other baristas. He is also responsible for the store inventory and ordering, schedules worker shifts, and helps interview and hire job applicants. Although the employee does not have a formal title of a manager or supervisor, he has executive duties to manage the coffee shop, therefore, is a manager for purposes of the FLSA Accordingly, he may not keep any portion of the tips the customers provide because it is not possible to attribute the tips solely to the service the employee provides.
Notably, in 2018, Congress created separate penalties for violations of Section 3(m)(2)(B), including recovery of tips that a supervisor “kept,” and also the concurrent loss of the tip credit for any affected tipped employees whose tips the supervisor improperly kept.
Under the New York Labor Law, employers, owners, and their agents—including managers and supervisors—are similarly prohibited from accepting tips from customers. An employee is considered a manager or supervisor when they exercise meaningful authority or control over other employees, including authority to hire or fire employees or to direct and supervise their work.
If you believe a manager, supervisor, or employer has improperly taken a portion of your tips, or if you have questions about your rights as a tipped worker, please do not hesitate to contact the attorneys at Pechman Law Group at 212-583-9500.
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