State Guide · Michigan

Michigan Tip Pooling Laws Explained

Michigan nearly abolished its tip credit in 2025 — then the legislature kept it, on a schedule that raises the tipped cash wage every year through 2031. Here's where Michigan tip pooling stands now.

Last updated July 2026 · 6 min read

Michigan's tipped-wage rules went through a whiplash cycle: a court ruling was set to phase the tip credit out entirely in February 2025, and a last-minute law (Public Act 6 of 2025) kept the tip credit — but on a rising schedule. The tipped cash wage, long 38% of the minimum wage, steps up each year until it reaches 50% of the minimum wage in 2031, while the minimum wage itself also climbs and then adjusts with inflation.

The moving wage math

Two numbers move every year

Both the Michigan minimum wage and the tipped percentage change on a schedule. That means the tipped cash wage rises every year through 2031 — budget for it, and re-check your payroll settings each January and whenever the schedule steps.

As always with a tip credit, tips must bring each employee to at least the full Michigan minimum wage for the workweek; if they don't, the employer makes up the difference in cash.

Who can share in a Michigan pool

Mandatory tip pools are legal, and Michigan follows the federal eligibility framework.
While a tip credit is taken, pools are limited to customarily and regularly tipped employees.
If everyone is paid the full minimum wage in cash, back-of-house may join.
Managers, supervisors, and owners never share — the duties-based federal test applies.

Notice and records

Michigan requires that tipped employees be informed of the tip-credit arrangement before it's taken, and the state's wage law expects payroll records showing tips received and how any pool was distributed. Michigan also requires a signed statement of tips received in each pay period to support the credit — a paper trail most POS reports alone won't give you.

Michigan compliance checklist

Re-check the cash wage every January — both the minimum and the tipped percentage move through 2031.
Verify tips close the gap to the full minimum wage every workweek.
Give tip-credit notice before the first tipped shift and collect per-period tip statements.
Keep pools to customarily-tipped roles while any tip credit is taken.
Log every pool distribution — the rising schedule invites wage audits.

A wage that moves every year is exactly the kind of thing software should track for you. Divvy applies the split identically every shift and keeps the records. Start with the federal guide, or compare Ohio and Illinois.

Frequently asked questions

Did Michigan get rid of the tip credit?

No. A 2025 law kept the tip credit after a court ruling nearly phased it out. Instead, the tipped cash wage rises on a schedule — from 38% of the minimum wage toward 50% by 2031 — while the minimum wage itself also increases.

Is tip pooling legal in Michigan?

Yes. Mandatory pools are legal under the federal framework Michigan follows: customarily-tipped employees only while a tip credit is taken, back-of-house allowed when everyone earns the full minimum wage in cash, and managers and owners always excluded.

What records does Michigan require for tipped employees?

Payroll records showing tips received and pool distributions, plus a signed statement of tips from the employee each pay period to support the tip credit.

What happens if tips don't reach the Michigan minimum wage?

The employer must make up the difference in cash for that workweek. The tip credit only applies when cash wage plus tips reaches at least the full Michigan minimum wage.

This guide is general information, not legal advice. Tip laws change and vary by state and city. Verify current rules with the U.S. Department of Labor, your state labor agency, and a qualified employment attorney before setting your tip policy.