Tip Pooling Rules for Kitchen Staff in the US (FLSA)

Back of house can share in a mandatory tip pool under federal law only if every pooled employee is paid at least the full minimum wage in cash, with no tip credit taken for anyone in the pool. A sushi or teppanyaki chef working in view of guests is often a tipped employee in their own right, which changes their guaranteed wage, overtime rate and, on some visas, whether tips count toward the promised wage at all.

1. The federal basics

• A tipped employee is one who customarily and regularly receives more than $30 a month in tips.
• An employer may pay a tipped employee a cash wage of at least $2.13 an hour and count tips toward the rest of the federal minimum wage of $7.25. This is the tip credit, worth up to $5.12 an hour. If tips do not make up the difference in a given workweek, the employer pays it.
• Tips belong to the employees. DOL states that the FLSA prohibits employers from keeping any portion of employees' tips for any purpose, whether directly or through a tip pool.

What changed in 2018

The Consolidated Appropriations Act, 2018 amended section 3(m) of the FLSA, barring employers, managers and supervisors from keeping any portion of employees' tips, whether or not a tip credit is taken. DOL confirmed that employers paying the full federal minimum wage may bring cooks and dishwashers into tip pools. Violations can bring civil money penalties on top of the tips owed and an equal amount in liquidated damages. DOL's regulations were updated by a final rule in December 2020, partly withdrawn and revised in September 2021.

2. Two models, compared

The point that decides everything for kitchen staff: back of house can only join a mandatory tip pool if no one in that pool is on a tip credit. Pay servers $2.13 an hour and count tips toward minimum wage, and the pool stays limited to occupations that customarily receive tips.

3. States where there is no tip credit to take

Federal law sets a floor. Several states with large numbers of Japanese restaurants do not allow a tip credit at all, so Model A is not available there: every tipped employee, including any pooled cook, must already be on the full state minimum wage in cash. As of July 2026: Alaska, California, Guam, Minnesota, Montana, Nevada, Oregon and Washington.

Everywhere else, a tip credit is allowed under a state-specific formula, and several states set their own tipped cash wage above the federal $2.13 (New York's hospitality wage order is one example). Check your state labor department's current tipped minimum wage before setting up a pool.

4. Where sushi and teppanyaki chefs fit

This is where Japanese restaurants differ from most. DOL's Wage and Hour Division concluded in opinion letter FLSA2008-18 (2008) that itamae-sushi chefs customarily and regularly receive tips. Opinion letter FLSA2025-03 (2025), on front-of-house oyster shuckers, compared their work to "a front-of-house itamae-sushi chef or teppanyaki chef" and set the test: the employee must perform service-related functions and have sufficient interaction with tipping customers.

In practice:

• A sushi chef who works the counter, presents dishes and talks with guests is likely a tipped occupation and can usually share in a Model A pool.
• A cook in the back kitchen, out of sight, is not, and can only share under Model B.
• A chef splitting time between counter and back kitchen is the hard case. Keep clear rosters of who worked where, and take advice before pooling them under a tip credit.

Opinion letters apply to their own facts. Use them as guidance, not a guarantee for your restaurant.

5. What "tipped employee" changes: overtime and visa pay

Calling a chef a tipped employee is not a label with no consequences. It moves three numbers.

• Guaranteed cash wage. Under a tip credit, the floor drops to $2.13 an hour federally (or your state's tipped cash wage), topped up only if tips fall short that workweek. A chef used to a fixed monthly salary in Japan will not expect this; explain it before day one, not on the first payslip.
• Overtime. DOL's Fact Sheet #15 is explicit: with a tip credit, overtime is calculated on the full minimum wage, not the reduced cash wage, and the credit itself does not grow for overtime hours. At the federal floor: 1.5 × $7.25 = $10.875, minus the $5.12 credit, for a cash wage of about $5.755 an hour on overtime, topped up by tips as usual. See chef overtime rules by country for the full US picture.
• Visa and prevailing wage. If you sponsor the chef, DOL's H-2B wage guidance (Fact Sheet #78C) lists commissions, bonuses and incentives as pay that can count toward the offered wage but does not mention tips. We could not confirm tips count toward an H-2B offered wage or a PERM/EB-3 prevailing wage. Treat the visa wage as guaranteed cash, separate from tips, until an immigration attorney confirms otherwise.

6. Managers, owners and head chefs

Employers, managers and supervisors cannot receive tips from a pool under either model. DOL's duties test: a manager or supervisor's primary duty is managing the enterprise or a department, customarily directing at least two full-time employees, with authority to hire or fire (or weight in that decision).

Many head chefs meet that test. An executive chef who runs the kitchen, directs several cooks and decides who is hired is very likely excluded, even if they spend the evening at the sushi counter. DOL's rule does let a manager keep tips received directly from a customer for service personally provided. Owners working the counter are in the same position: no share of the pool.

7. Service charges are not tips

DOL states that a compulsory service charge, for example 15 percent of the bill, is not a tip under the FLSA. Sums paid to employees out of it are not tips, but count toward the employer's minimum wage and overtime obligations and toward the regular rate used for overtime. Because the FLSA's tip pool limits apply to tips specifically, a service charge is a second, separate way to reward back of house, subject to state law. Be clear with guests about what the charge is; some states regulate it directly, so check yours.

8. Presenting a tip-based package to a chef in Japan

A chef recruited from Japan has no frame of reference for pay that is partly tips: Japanese kitchen pay is almost entirely a fixed monthly salary. State the guaranteed floor first, in writing, in both languages, and label everything else as variable.

For the full picture of what a Japanese chef costs, see budgeting an international chef hire and US prevailing wage for chefs. For negotiating the whole package, see chef salary negotiation.

General information, not legal advice. This guide covers federal rules and a partial state layer. State and local laws on tip credits, tip pools and service charges vary further and may be stricter. Take advice from an employment lawyer in your state before setting up or changing a tip pool.