U.S. Department of Labor Finds Pittsburgh Restaurant Illegally Shared Workers’ Tips With Managers and Non-Tipped Employees
The U.S. Department of Labor’s Wage and Hour Division (WHD) found that a Pittsburgh restaurant violated federal labor laws by illegally distributing workers’ tips to managers, supervisors, and employees who do not customarily receive tips.
The improper tip pool led WHD to recover $41,560 in back wages for 12 affected employees, ensuring workers received the money owed to them under the Fair Labor Standards Act (FLSA).
Overview of the Investigation
The WHD determined that the restaurant:
Required tipped employees to share tips with managers and supervisors
Distributed tips to workers who do not usually receive them (non-tipped staff)
Failed to provide any tip pool contribution notice
Retained a portion of employee tips for non-authorized uses
These practices violate FLSA tip protection rules, which strictly prohibit employers from diverting employee tips for any purpose other than distribution among eligible tipped workers.
What the FLSA Requires for Tip Pools
Under federal law, a valid tip pool must meet the following requirements:
Only employees who customarily and regularly receive tips can participate
Managers and supervisors are never allowed in the tip pool
Employers must provide proper written notice of tip pool contributions
Employers must not keep any portion of employees’ tips
The tip credit applies only to the amount of tips the employee actually receives
The Pittsburgh restaurant violated multiple parts of this regulation.
Financial and Legal Consequences
As a result of the investigation, the employer was required to pay:
$41,560 in back wages
Compensation for improperly distributed tips
Restitution to all 12 affected employees
Improper tip pooling can also expose employers to:
Civil money penalties
Private wage theft lawsuits
- Damage to the restaurant’s reputation
These costs can increase rapidly if violations are repeated or widespread.
Why This Case Matters for Restaurant Owners
Tip pooling rules are among the most frequently misunderstood federal regulations in the restaurant industry.
Restaurants often make these illegal mistakes without realizing it:
Allowing managers or shift leaders to receive tips
Including kitchen or prep staff in tip pools
Missing or incomplete written tip credit notices
Retaining tip money to cover breakage or fees
Paying tipped workers less than they are legally owed
Even unintentional violations trigger financial liability.
How Restaurants Can Avoid Tip Pooling Violations
To prevent costly violations like this Pittsburgh case, restaurants should:
Review all tip pooling and distribution policies
Provide written tip credit and tip pool notices to employees
Ensure managers never receive tips
Maintain clear tip-tracking and payroll documentation
Conduct periodic compliance audits
Train supervisors on FLSA requirements for tipped workers
A proactive approach helps prevent WHD investigations and lawsuits.
To understand how these violations happen and how to prevent them, read our Ultimate Guide to Wage & Hour Compliance for Restaurants.”
Protect Your Restaurant Before Tip Violations Become Expensive
Most restaurants don’t realize they’re violating tip laws until WHD is already involved.
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