Texas tip pooling law: the federal rules, enforced two ways
Texas has no state tip law of its own. The Texas Minimum Wage Act adopts the federal minimum wage and the federal tip credit, so the FLSA rules apply in full — and the Texas Workforce Commission enforces wage claims alongside the US Department of Labor. That makes Texas simple to describe and easy to get wrong, because the federal pooling limits bite hardest where the $2.13 cash wage is used.
Wages and the tip credit in Texas
| Item | 2026 | Source |
|---|---|---|
| Minimum wage | $7.25 | Texas Labor Code §62.051 adopts the federal rate |
| Minimum cash wage for tipped employees | $2.13 | FLSA §3(m), followed by Texas |
| Maximum tip credit | $5.12 | FLSA §3(m) |
| Tipped employee threshold | more than $30/month in tips (federal); Texas law refers to $20 | FLSA / Texas Labor Code §62.052 |
Texas cities may not set a higher local minimum wage for private employers, so $7.25 and $2.13 apply statewide. If an employee’s cash wage plus tips does not reach $7.25 for the workweek, the employer must make up the shortfall. Overtime for tipped staff is 1.5 × $7.25 = $10.88 minus the tip credit (so a cash overtime rate of at least $5.76), not 1.5 × $2.13.
Tip pooling under Texas rules
Because Texas employers almost always take the tip credit, the federal tip-credit pool rule is the operative one: the pool may include only employees who customarily and regularly receive tips — servers, bartenders, bussers, barbacks, runners, hosts who greet and seat. Cooks and dishwashers may join a pool only if the employer pays everyone in the pool the full $7.25 in cash with no tip credit. Managers and supervisors (duties test, not title) can never receive tips from a pool; owners cannot keep any portion. The employer must tell tip-credit employees about the pool and its terms in advance.
The Texas Workforce Commission’s guidance says the same: tip pooling among customarily tipped employees is the only exception to the rule that an employee keeps all of their tips, and the tip credit is available only if “all tips received by such employee have been retained by the employee” apart from a valid pool contribution.
The Texas Payday Law and deductions
The Texas Payday Law (Labor Code Chapter 61) generally requires an employee’s written authorization for any deduction that is not required by law or court order. The Workforce Commission treats the federal tip credit as authorized by law, so no written authorization is needed to pay $2.13 plus tips — but the FLSA notice requirements still apply. Taking a share of tips for the house, charging staff for walkouts or breakage out of tips, or deducting more than the actual proportional card fee from card tips are unlawful deductions under both laws.
Credit card fees
Texas follows the federal rule: the employer may deduct the proportional card processing fee from a card tip, and must pay card tips by the next regular payday. The deduction may not bring the employee below minimum wage. State a fixed percentage in your policy and do not round it up.
Side work
With the federal 80/20 rule vacated in 2024 and removed from the regulations in December 2024, there is no percentage test in Texas for side work within a tipped job. The “dual jobs” rule remains: if a server also works a separate non-tipped job (maintenance, janitorial) for the same employer, the tip credit applies only to the hours in the tipped job.
Enforcement and records
Employees can file a wage claim with the Texas Workforce Commission within 180 days of the pay date, or an FLSA claim with the US Department of Labor or in court (two years, three for wilful violations). Keep per-shift records of tips received, contributions to and distributions from the pool, and hours — the FLSA requires them for pooled houses, and they are what wins a claim. Texas payroll records must be kept for at least four years under state unemployment law; keep tip records as long.
Checklist for a Texas house taking the tip credit: written tip-credit notice to each employee before the first shift; pool limited to customarily tipped roles (no kitchen); no manager or supervisor on the distribution list; card-fee deduction equal to the actual cost only; weekly check that cash wage plus tips reaches $7.25; per-shift pool records kept four years.
FAQ
What is the tipped minimum wage in Texas in 2026?
Employers may pay a cash wage of $2.13 per hour and take a tip credit of up to $5.12, as long as the employee actually earns enough tips to reach the $7.25 minimum wage. Texas follows the federal figures and has no higher local rates.
Can a Texas restaurant include kitchen staff in the tip pool?
Only if nobody in the pool is paid under the tip credit — that is, everyone receives at least $7.25 in cash wages. In the usual $2.13-plus-tips arrangement the pool is limited to front-of-house roles that customarily receive tips.
Does a Texas employer need written permission to take the tip credit?
No written authorization is needed under the Texas Payday Law because the credit is authorized by federal law, but the employer must still give employees the FLSA tip-credit notice in advance.
Can managers take tips in Texas?
No. Managers and supervisors may keep only tips customers give them directly for service they alone provided; they may never take a share of a tip pool or tip-out.
Official sources
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Related guides
This guide is general information for operators, not legal, tax or payroll advice. Rates and rules change; the official sources above are the authority. SplitTips applies the rule you set and does not decide what is lawful in your jurisdiction.