Georgia tip pooling and service charge rules for restaurants (2026)

Georgia has no separate tip pooling law for restaurants that a business owner needs to learn, so the federal rules from the U.S. Department of Labor do the work. That makes Georgia simpler than some states, but it also means the federal rules are enforced strictly, and the rules about managers and service charges catch many owners. This guide, checked in October 2026, explains the basics. It is general information, not legal advice. Check the Department's current fact sheets or ask counsel before you change a policy.

What does federal law say about who owns a tip?

A tip belongs to the employee. The Department of Labor says an employer may not keep any employee's tips for any reason, and a manager or supervisor may not keep any part of other employees' tips. This holds whether or not you take a tip credit. If a guest adds a tip on a card, you must pay it out, and you may deduct only the share of the card processing fee that applies to the tip. A lawful tip pool is the main exception that allows tips to be shared.

Who can join a pool?

If you take a tip credit, the pool may include only employees who customarily and regularly receive tips, such as servers, bartenders, bussers and food runners. If you pay the full minimum wage and take no credit, the pool can include other employees, such as cooks and dishwashers, but still not managers, supervisors or owners. The Department decides who is a manager by duties, not title: someone whose main job is managing, who directs at least two full-time employees and who can hire or fire, or whose recommendations count. Review your list of roles against this test.

What about a lead server or a shift supervisor?

If a lead has real management duties, keep the person out of the pool, even if the person also serves tables. A 2026 opinion letter from the Department of Labor, as summarized by law firms, confirms that a working supervisor who meets the manager test cannot join a pool. Tips a supervisor receives directly from guests for service the supervisor provides alone are a separate matter. Ask counsel to review any position that blends management and service.

What is a service charge?

A service charge is an amount that the business adds to the check, often for a large party or a private event, which the guest must pay. Under federal guidance, a mandatory service charge is business revenue and not a tip. You may use it to pay wages, cover costs or distribute as you choose, but if you pay it to staff, it counts as wages and is taxed that way. If guests could reasonably think the charge is a gratuity, they might also leave a tip, so label it clearly on the menu, the contract and the check.

Does sales tax apply to a service charge?

In many cases a mandatory service charge on a food sale is part of the taxable price, but the treatment depends on how it is structured, so ask the Georgia Department of Revenue or your accountant. A voluntary gratuity that the guest adds is generally not taxed in the same way. Keep the two lines separate on the check and in your point-of-sale system.

How do you build a fair policy?

Write the policy. Say who is in the pool, how shares are set, when tips are paid and how disputes are handled. Pay out in the same pay period. Give a copy to every employee and keep a signed acknowledgment. Hold a short meeting when you introduce it. If you change it, give notice. Decide who tracks card tips, and who reviews the totals.

Consider asking a small group of staff, a server, a bartender, a busser and a runner, to review your draft and say what seems unfair. A pool works best when every participant believes the formula reflects the work. Test the formula on a sample week before you adopt it, and check that nobody earns less than before without a reason. Publish an example calculation so staff can check their own checks.

What mistakes cause claims?

Managers in the pool, undisclosed deductions, delayed payouts, charging staff for walkouts or breakage out of tips, mislabeling a service charge, and failing to keep records. A claim can cover several years and every employee affected, so a small error can be expensive. Review the policy yearly.

Another source of claims is the catered event. A banquet or a wedding often has a service charge, a gratuity line and a tip jar, and staff and guests may not know which is which. Write the arrangement into the event contract, say who receives what and keep a record of the payout. When an event is canceled and a deposit is kept, do not count any part of it as a tip.

What should you do first?

Print your current tip policy and compare it with the Department's fact sheets. Remove anyone who fails the manager test. Check the wording of service charges on menus and contracts. Then ask a payroll professional to confirm the setup.

More guides for your business:

• Georgia alcohol licenses and Sunday brunch hours for restaurants
• Georgia tipped wage and tip credit for restaurants: what applies in 2026
• Georgia catering for offices and private events: permits and contracts

More in the US guides for food businesses.