Montana Tip Pooling Laws Explained

Montana bans the tip credit outright: tipped employees earn the full state minimum wage — which adjusts with inflation every January — before tips. Here's how Montana tip pooling works.

Montana is one of the handful of states with no tip credit: employers pay the full Montana minimum wage in cash, and tips come on top. The minimum adjusts for inflation every January 1, so re-check the rate annually. One quirk: businesses not covered by the federal FLSA with gross annual sales of $110,000 or less may pay a lower $4.00 rate — but nearly every restaurant is FLSA-covered, so treat the indexed state minimum as the number.

What no tip credit changes

Tips are the employees' property under the federal framework Montana follows. Mandatory pools are legal with advance notice; the employer may never keep any portion.

Who can share in a Montana pool

• Mandatory pools are legal with notice.
• Back-of-house may be included, since no tip credit is taken.
• Managers, supervisors, and owners never share — the duties-based federal test applies.
• Only the actual proportional card-processing fee may be deducted from card tips.

Montana compliance checklist

• Pay the full Montana minimum wage in cash — re-check every January 1 when it indexes.
• Give written notice of any mandatory pool before it starts.
• Keep every manager, supervisor, and owner out of pools and tip-outs.
• Apply one written formula consistently and keep per-shift distribution records.

No tip credit keeps the wage math simple — the fairness and record-keeping are where disputes start. Divvy applies the split identically every shift. Start with the federal guide, or compare Alaska, Minnesota, and Washington.

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.