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On September 7, 2026, the U.S. Department of Labor’s Wage and Hour Division issued Opinion Letter FLSA2026-13 addressing whether a restaurant shift supervisor who also works bartending shifts or assists hosts and bussers may receive coworkers’ tips through a mandatory tip-out or tip-pooling arrangement. The DOL’s answer was no. If an employee qualifies as a manager or supervisor, stepping into a tipped role does not entitle the employee to any portion of other employees’ tips.
According to the FLSA, an employer may not keep tips received by its employees for any purpose, including by allowing managers or supervisors to retain any portion of employees’ tips, regardless of whether the employer takes a tip credit.
When Does a Supervisor Qualify as a Manager Under the FLSA?
Whether an employee qualifies as a “manager or supervisor” is determined by the executive duties test, not by the employee’s job title. The test considers whether management is the employee’s primary duty, whether the employee regularly directs at least two full-time employees, and whether the employee has authority to hire or fire other employees or whether the employee’s recommendations carry particular weight.
In FLSA2026-13, the DOL did not determine that the “shift supervisor” met this test because the request lacked sufficient detail about the employee’s hiring and firing authority. Instead, the DOL assumed for purposes of its analysis that the employee qualified as a manager or supervisor.
The Limited Exception for Tips Earned Directly
The DOL recognized one limited exception. A supervisor may retain tips received directly from customers for services the supervisor “directly and solely” provides, such as tips left by the supervisor’s own bar customers or by a table the supervisor personally serves. However, if those tips are pooled with other bartenders’ tips and divided across the shift, the supervisor may not retain any portion because the amount can no longer be attributed solely to the supervisor’s service.
The stakes are undoubtedly high. A violation of Section 3(m)(2)(B) can require an employer to return improperly retained tips and may disallow the tip credit for each affected employee whose tips were taken. For employers, the implication is clear. Occasionally performing tipped work does not make a supervisor eligible to participate in a tip pool if the employee otherwise meets the FLSA’s standard for a manager or supervisor.
Employers in the hospitality industry should review whether working supervisors and shift leads satisfy the FLSA’s managerial duties test and confirm that payroll and point-of-sale systems do not automatically distribute coworkers’ tips to those employees.
For more information about the DOL’s guidance on tip pooling or other wage and hour compliance issues, contact a member of Chartwell Law’s Labor and Employment Practice Group.
