State Guide · Tennessee

Tennessee Tip Pooling Laws Explained

Tennessee has no state minimum wage, so the federal FLSA sets the wage math — but a Tennessee statute adds its own rule that tips and advertised service charges belong to employees. Here's how Tennessee tip pooling works.

Last updated July 2026 · 6 min read

Tennessee has no state minimum wage, so tipped work runs on the federal FLSA: a cash wage as low as $2.13 per hour, with tips making up the rest to the federal $7.25 minimum. If tips fall short in a workweek, the employer pays the difference in cash.

Tennessee's tip-ownership statute

Tips and posted gratuities belong to the staff

Tennessee's tip statute (Tenn. Code Ann. § 50-2-107) requires that when a business includes a service charge or gratuity on the bill or advertises that one applies, that amount must be paid over to the employees who provided the service — and tips left for employees belong to them. It's one of the few state laws that turns a posted "gratuity" into the staff's money rather than house revenue, so confirm how it applies to your setup with counsel or the state labor department.

That's stricter than the federal treatment of service charges (which normally belong to the employer). If your checks carry an automatic gratuity in Tennessee, plan for it to reach the team — and keep records showing it did.

Who can share in a Tennessee pool

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

Side work and card fees

Federal rules govern the rest: the tip credit only covers tip-producing work and its directly supporting tasks, and an employer may deduct only the actual proportional card-processing fee from card tips — never below minimum wage.

Tennessee compliance checklist

Pay at least $2.13 in cash and verify tips reach $7.25 every workweek.
Distribute any advertised service charge or auto-gratuity to the service staff, per the state statute.
Give tip-credit and pool notice before the first tipped shift.
Keep pools to customarily-tipped roles while a tip credit is taken.
Keep per-shift distribution records for every pool and tip-out.

A statute that turns posted gratuities into staff money makes distribution records essential. Divvy keeps them automatically. Start with the federal guide, or compare Georgia and North Carolina.

Frequently asked questions

What is the tipped minimum wage in Tennessee?

Tennessee has no state minimum wage, so federal rules apply: a cash wage as low as $2.13 per hour, with tips bringing the employee to at least $7.25 for the workweek. If tips fall short, the employer makes up the difference.

Is tip pooling legal in Tennessee?

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

Who gets an automatic gratuity in Tennessee?

The employees who provided the service. Tennessee's tip statute requires that a service charge or gratuity a business adds or advertises be paid over to the staff — stricter than federal law, under which service charges normally belong to the employer.

Can kitchen staff join a Tennessee tip pool?

Only if the employer takes no tip credit and pays everyone the full minimum wage in cash. While a tip credit is taken, mandatory pools are limited to customarily and regularly tipped roles.

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.