Generally no – employers cannot require employees to pool their tips in Minnesota, but there are a few exceptions to this rule. Here’s what employer’s need to know about the tip-pooling rules in Minnesota:
General Rule: The general rule in Minnesota is that “[n]o employer may require an employee to contribute or share a gratuity received by the employee with the employer or other employees or to contribute any or all of the gratuity to a fund or pool operated for the benefit of the employer or employees.” Minn. Stat. § 177.24, subd. 3.
Voluntary Tip Pools: The law does not prevent employees from voluntarily sharing gratuities with other employees, provided there is no employer coercion. If employees decide to share their tips voluntarily, an employer generally cannot participate in the arrangement, except that the employer may: (i) upon the request of employees, safeguard gratuities to be shared by employees and disburse shared gratuities to employees participating in the agreement; (ii) report the amounts received as required for tax purposes; and (iii) post a copy of Minnesota’s tip-pooling law for the information of employees. Minn. Stat. § 177.24, subd. 3.
The Banquet Exception: Another exception to the tip-pooling rule applies to banquets or similar food and cocktail service events. With respect to this exception, the law states that “[w]hen more than one direct service employee provides direct service to a customer or customers in a given situation such as banquets, cocktail and food service combinations, or other combinations, money presented by customers, guests, or patrons as a gratuity and divided among the direct service employees is not a violation of [Minnesota's tip-pooling statute].” Minn. R. § 5200.0080, subp. 8.
Takeaways: In most cases, employers cannot require employees to share tips in Minnesota. The two primary exceptions to this rule are: (i) when employees voluntarily agree to share tips; and (ii) when tips are shared among direct service employees at banquets or similar food and cocktail events.