Like many other Texas restaurant owners, you were probably shocked when a Dallas barbecue joint was ordered to pay their employees nearly $900,000 in stolen tips and overtime. It may have even sparked a bit of anxiety about your own tipping policies and practices.

Illegal and unethical tipping practices not only decimate your restaurant financially, but can also tank your reputation. Avoid losing your business and the community’s trust by freshening up on Texas tipping laws. 

Who Can Participate in Tip Pools? 

In Texas, mandatory tip pools are perfectly legal, so long as you follow the guidelines laid out by the Fair Labor Standards Act (FLSA). 

For one, only employees who “customarily and regularly receive tips”— namely servers, bartenders, hosts, and expos — can participate in a tip pool, and back-of-house employees cannot. 

Owners, managers and supervisors are also barred from participating in tip pools. Tips belong expressly to the tipped employee, so an owner cannot take a cut of the tip pool, and neither can their agents in the form of managers. If you’re caught distributing tips to owners or managers, it will be considered wage theft, and you will be ordered to pay back the tips and subject to hefty fines by the DOL. 

Learn to Properly Calculate the Tip Credit

The tip credit allows employers to pay tipped employees a lower hourly wage, with the idea that the server will earn at least minimum wage or more in tips. In Texas, employers can take up to $5.12 per hour in tip credit. But if used incorrectly, you could end up owing your employees back pay. 

In order to take the tip credit, your employee’s hourly wages must be greater than or equal to the minimum wage for their hours worked — at least $7.25 per hour in Texas. Employees also must earn more than $30 per month in tips for the tip credit to apply. 

And head’s up — the tip credit can still apply when your employees are earning overtime. Ensure that you’re properly compensating employees when their work hours exceed 40 per week. 

Using the tip credit requires a good bit of math (especially when overtime is involved), and there’s room for human error in your calculations. Check out our primer on calculating the tip credit and then go double-check your math. 

How to Protect Your Business & Employees

You don’t want to jip your employees — nor do you want to risk your entire business. Now that you’re more familiar with Texas tipping laws, here are a few ways you can comply with them. 

Hire an Attorney 

It’s best practice to consult with a lawyer with any legal questions. An attorney can give you detailed, personalized advice about what’s best for your business and how to stay on the right side of the law.

Choose Vendors that Protect You

At Kickfin, we partner with restaurants to revolutionize everything about their gratuity management systems — including setting up guardrails to comply with tipping laws. Request a demo of Kickfin today. 

Filled with tourist destinations and great weather, Florida is the perfect place for restaurants to thrive — as long as they can comply with tipping regulations. Like many other states, Florida has unique state tipping laws that are often in flux.

Whether you own a seafood shack right on the beach or a fine-dining spot in a Miami hotel, you need to know the ins and outs of Florida’s tipping laws. 

Is Tip Pooling Legal in Florida?

Many restaurants implement tip pooling systems to create equitable pay for servers and foster a collaborative work environment, but laws around tip pools can get fuzzy state-by-state.

Florida restaurant owners can breathe a sigh of relief, though — Florida’s tip pooling laws align with the federal regulations laid out by the Fair Labor Standards Act (FLSA).

Florida’s Minimum Wage & Tip Credit

Florida joins the majority of states in allowing employers to take the tip credit — but not quite as much as other states. Federal rules set the minimum wage at $7.25 per hour and allow employers to take up to $5.12 in tip credit. 

At the time of publication, Florida’s minimum wage is $11 per hour, significantly higher than the federal minimum wage. On top of an increased minimum wage, Florida only allows employers to take a tip credit of $3.02 per hour. With these regulations in place, Florida restaurant owners must pay tipped employees at least $7.98 per hour. 

But head’s up — the minimum wage is increasing. As of September 30, 2023, Florida’s minimum wage will increase to $12.00 per hour, and will continue increasing each year until it reaches $15.00 per hour in 2026. Looking ahead, restaurant owners can expect to pay a tipped minimum wage of $11.98 per hour.

Mandatory Service Charges Are Wages in Florida

If you’re charging a mandatory service fee for large parties or to reserve a table, you might hope that will count as a tip for your service staff. 

Mandatory service charges are not considered tips in Florida, but rather are the property of the employer. The employer may choose to distribute the service charge to an employee, but these would count as wages and would be subject to payroll tax withholdings. 

That being said, Florida has not joined other states in requiring employers to make it clear to customers that mandatory service charges are not considered tips.

Tip laws can get tricky, so always consult a lawyer when changing tip policy. 

At Kickfin, we want to help restaurants comply with tipping regulations and save you time and energy. We put up guardrails that prevent improper tipping practices and make it easy to instantly tip out your staff. Request a demo to see for yourself.