Minnesota tip pooling and tip sharing rules for restaurants

Minnesota takes a firm line on tips. They belong to the person who earned them, and the law is careful about how an employer may touch them. That matters for a kitchen that wants to reward cooks and dishwashers, for a manager who wants to run a pool and for an owner who adds a charge to the check. This guide, checked in November 2026, reads Minnesota Statutes section 177.24 on gratuities and the federal rule on managers and tips. It is general information, not legal advice. The Minnesota Department of Labor and Industry and an employment lawyer can tell you how the rule applies to your own pool.

Who owns a tip in Minnesota?

The statute says any gratuity received by an employee is the sole property of the employee. A customer's tip is not the restaurant's money and is not a way to pay wages. The statute also says tips may not be counted toward the minimum wage, which fits with Minnesota having no tip credit. Our guide on the minimum wage and no tip credit rule explains that side. Because a tip is the employee's property, any plan that moves tips between people needs a clear legal footing.

Can an employer require a tip pool?

The statute says an employer may not require an employee to contribute or share a gratuity received by the employee with the employer. That bars taking a cut for the house. It also says employees may share tips among themselves voluntarily, but the arrangement has to be made without employer coercion or participation. Read together, those words make a pool that the owner designs and enforces a risky choice. Whether a manager-set pool among staff fits the statute is a question for the Department of Labor and Industry or a lawyer, and you should ask before you start one.

What may an employer do at the employees' request?

The statute lets an employer hold tips for sharing and distribute them, and report them for tax purposes, when employees ask. In a restaurant that means the employees decide how the pool works, and the payroll office carries out what they decided. A record of the request, signed by the employees, protects both sides. If employees change their minds, the employer follows the new request. The statute also says the employer must post a notice of the section.

How must card tips be paid?

Tips paid by card or other electronic payment count in the pay period in which they are received, and the full amount must be paid to the employee by the next scheduled pay period. That is a firm timeline. A restaurant that pays card tips weekly in cash, or that holds them for a month, may be late. Check your payroll calendar against the rule, and make sure the amount paid is the full amount.

What about processing fees on card tips?

The sections read for this guide do not address deducting a card processing fee from a tip, and the statute's phrase that the full amount must be paid is a reason for caution. Ask the department or a lawyer before you reduce a tip by a fee. Many owners absorb the fee as a business cost so the question never arises.

May managers and owners take part?

Under the federal rules, managers and supervisors may not keep employees' tips, and they may not receive money from a required pool. Minnesota's statute adds that tips are the employee's sole property. An owner who works the floor should keep personal tips separate and follow the same rules as staff. A written policy that says who is covered removes the guesswork.

What if the restaurant adds a service charge?

A service charge is not a tip unless it is presented as one. Minnesota defines gratuities to include an obligatory charge that a guest might reasonably take for a payment for personal service, unless the employer gives clear and conspicuous notice that the charge is not the property of the employee. Our guide on automatic gratuity and large parties explains the definition and the tax rules.

What records should you keep?

Keep tip records by employee and pay period, the written request from employees if you hold or distribute a pool, the payroll reports showing when card tips were paid and the posted notice. If the department asks for restitution of diverted tips, which the statute allows, your records are the answer.

What should you do next?

Look at how tips move through your restaurant today. Is anyone required to give up part of their tips? Do card tips reach staff by the next pay date? Is the notice posted? Fix any gap first, and then ask the department about the pool you want.

More guides for your business:

• Minnesota sales tax on restaurant meals: the state and local layers
• Minnesota automatic gratuity, large parties and sales tax
• Minneapolis and St. Paul minimum wage and break rules for restaurants

More in the US guides for food businesses.