New York tip pooling rules for restaurants: who may be in the pool

A New York restaurant owner who wants to share tips between servers, bussers and runners has more room than owners in many states, and less room than they might think. The state's hospitality wage order, in title 12 of the state regulations, has a section on tip pooling that does two things at once: it lets an employer require a pool and it limits who can receive from it. This guide, checked in November 2026, reads section 146-2.16 and the related section on charges purported to be gratuities, plus Labor Law section 196-d. It is general information, not legal advice. The Department of Labor and a lawyer can tell you how it applies to your pool.

Can an employer require a tip pool in New York?

Yes, for food service workers. The regulation says an employer may require food service workers to participate in a tip pool and may set the percentage to be distributed to each occupation from the pool. That is a stronger permission than many states give. The employer decides who is in the pool, among food service workers, and how each occupation shares. Put the percentages in writing, because the regulation gives you the right to set them but does not say you can change them without telling anyone.

Who may receive money from the pool?

Only food service workers may receive distributions from the tip pool. The regulation does not list the occupations in the section read, so check the definition of a food service worker in the wage order with the Department of Labor before you name the roles. Owners, managers and others who are not food service workers are outside the pool. A restaurant that lets a manager take a share risks a violation of the section, and of Labor Law 196-d.

What about a voluntary pool?

The section also describes a voluntary pool. Directly tipped employees may mutually agree to pool their tips and to redistribute them among directly tipped employees and the indirectly tipped employees who participated in providing the service. The difference from a required pool is who decides. A voluntary pool is the employees' agreement. If you want to run it that way, let the employees agree, record the agreement and avoid steering the vote.

What does Labor Law 196-d add?

Section 196-d says no employer, agent or other person may demand or accept, directly or indirectly, any part of the gratuities received by an employee, or retain any part of a gratuity or of any charge purported to be a gratuity. It carves out practices such as employees sharing tips with busboys and the distribution of a fixed percentage of a banquet check to employees. The practical rule is that the restaurant does not keep tip money. The pool exists to move money from guests to eligible workers.

What if a worker takes more than their share?

The regulation says nothing in the section requires an employer to compensate participants in tip pooling for tips wrongfully withheld from the pool by any participant. So if a server underreports, the other members of the pool do not have a claim against you for the missing share under this section. Still, write a policy that says what happens when someone holds back tips, and apply it fairly.

How should you document the pool?

Write a policy that names the roles, the percentage each receives, the pay day, how card tips are handled and how a new hire is told. Have each employee sign it. Keep weekly pool records showing the total tips, the shares and the payout. The wage order requires records of charges purported to be gratuities to be kept for at least six years and to be available regularly for participants in the tip sharing or pooling system to review, so choose a system that can produce a clean report.

How does the pool interact with the tip credit and wages?

The pool decides who shares the tips, and the tip credit decides how much of the minimum wage the tips may cover. They are separate. Our guide on the tip credit, minimum wage and fair workweek rules explains the pay side.

How do you introduce or change a pool?

Tell staff before the change, in writing, and explain what is moving and why. A kitchen that has never shared tips will have questions, and a front-of-house team that has always kept its own will have more. Hold a short meeting, hand out the policy, give people a few days to ask questions and start the new system at the beginning of a pay period so the first payout is easy to check. Keep the signed pages and the date of the meeting. If the percentages are reviewed each year, put the review date on the policy.

What should you do next?

Write down who is in your pool today and who is not. Compare the list with the food service worker definition in the wage order. Put the percentages in a signed policy, and check that nobody who is not eligible receives a share. Then read how New York City treats mandatory gratuities.

More guides for your business:

• NYC mandatory gratuity and surcharge rule for parties of eight or more
• New York tip credit, minimum wage and fair workweek for restaurants
• New York hospitality wage order: spread of hours, call-in pay and uniforms

More in the US guides for food businesses.