Make tip distribution clear with this tip pooling policy template

While federal law under the Fair Labor Standards Act (FLSA) doesn’t explicitly require a written tip pooling policy, having one is strongly recommended (and some states do require written notice to employees about tip arrangements). A written policy protects your restaurant if a staff member disputes how tips were divided, and it creates a clear paper trail that demonstrates your process was fair and consistent. Without documentation, you’re relying on verbal agreements that are nearly impossible to defend. A signed policy agreement is one of the simplest ways to reduce your legal exposure around tip distribution. Requirements vary by location—check your state and local regulations.

Yes — a tip pooling policy template can be customized for each location, which is especially useful if your restaurants have different staffing structures or tip distribution rules. For example, a full-service location might split tips between servers, bussers, and food runners, while a fast-casual location might use a simpler equal-share model. The key is to make sure each location’s policy reflects its actual practice, and that employees at each location sign their own copy. If you’re managing multiple locations, a platform like 7shifts lets you set up separate tip pool rules for each location so the math is handled automatically.

Tip pooling means all tips collected during a shift go into a shared pool, which is then divided among a group of employees based on a set formula — like hours worked or role. Tip sharing (sometimes called “tipping out”) is when individual servers keep their own tips but contribute a percentage to support staff like bussers or bartenders. Both approaches need a clear written policy so your team knows exactly what to expect on payday.

No — under the federal Fair Labor Standards Act, managers and supervisors are prohibited from participating in a tip pool, even if they regularly perform tipped work like serving or bartending. Owners are also excluded. Including them — even unintentionally — can expose your restaurant to significant legal liability and back-pay claims. Your tip pooling policy should explicitly name which roles are eligible and which are not. Requirements vary by location, so check your state and local regulations.

The simplest approach is to have each employee read the policy and sign a copy before their first shift — or before you roll out a new tip arrangement. Keep a signed copy on file for every employee, and make sure the policy is easy to access if someone has questions later. The tip pooling policy template can help with this purpose, so you don’t have to build one from scratch.

You should review your tip pooling policy any time your staffing structure changes, you add a new role to the pool, or tip distribution rules shift — and at minimum once a year. Tip pooling laws also change at the state level, so it’s worth checking your local regulations annually to make sure your policy stays compliant. Any time you make a change, have employees sign an updated copy so your records stay current.

Inconsistent enforcement is one of the most common reasons tip disputes escalate into formal complaints or legal claims. If your policy says tips are split by hours worked but a manager occasionally overrides that, employees have grounds to question whether the arrangement is fair — or legal. A written policy that’s applied the same way every shift is your best protection. Using automated tip calculations through Tip Management removes the manual step entirely, so the math is always consistent and documented.