Texas Tip Pooling Laws Explained

Texas doesn't add its own tip-pooling rules on top of federal law — which means the FLSA baseline, including the full tip credit and its pooling restrictions, applies in full. Here's what that means in practice.

Texas is one of the states that simply follows federal law on tips. The Texas Minimum Wage Act adopts the federal minimum wage and the federal tip-credit rules, and Texas has no separate statute restricting tip pools. So for a Texas restaurant, the Fair Labor Standards Act (FLSA) is the rulebook.

The full federal tip credit applies

Texas employers may pay tipped employees a cash wage as low as $2.13 per hour and take a tip credit of up to $5.12, as long as tips bring the worker to at least the $7.25 federal minimum wage. If tips fall short in a workweek, the employer must make up the difference.

Who can be in a Texas tip pool

Because nearly every Texas restaurant takes the tip credit, the federal restriction usually applies: a mandatory pool may include only employees who customarily and regularly receive tips — servers, bartenders, bussers, runners, hosts. Cooks and dishwashers cannot be required to share.

In both cases, managers, supervisors, and owners can never take a share — the 2018 FLSA amendment applies in Texas exactly as everywhere else, and it's judged by duties, not titles.

Credit-card fees can be deducted — carefully

Texas follows the federal rule: an employer may deduct the proportionate credit-card processing fee from a card tip (for example, keeping 3 cents of a $1.00 tip if the processor charges 3%). The deduction can't reduce the employee below minimum wage, and tips must still be paid by the regular payday. Deducting more than the actual processing cost is illegal.

Texas compliance checklist

• Give written tip-credit notice before paying $2.13/hour.
• Verify tips actually bring each worker to $7.25 every workweek.
• Limit mandatory pools to customarily tipped roles while taking the credit.
• Keep managers, supervisors, and owners out of every pool and tip-out.
• Deduct only the true processing percentage from card tips, if you deduct at all.

Because the tip credit puts the burden of proof on you, records matter. Divvy applies your pooling rules consistently and keeps a per-payout audit trail. For the federal baseline in full, see the complete tip pooling laws guide, and compare stricter states like California 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.