Run it with less chaos · Every business
Tipping Policies: Accepting, Pooling and Telling Customers
A tipping policy answers three questions, whether you accept tips, where the money goes and what customers are told, and federal wage rules already settle part of the second one.
A small service business can accept tips, decline them or leave them optional, and whichever it chooses, the policy works best when it is written down, posted where customers pay and explained to staff the same way. If you have employees, federal law under the Fair Labor Standards Act says the business may not keep any portion of their tips for any purpose, including through managers or supervisors, so the decisions left to you are mostly about pooling, card fees and how you word it for customers.
General information, not legal/tax/financial advice; talk to a licensed professional about your situation. State tip and wage laws can be stricter than the federal rules below.
The policy checklist to copy
| Decision | What to write down | Federal rule to check |
|---|---|---|
| Do we accept tips? | "Tips are welcome but never expected," "We do not accept tips" or "Gratuity is included in our prices" | None for the choice itself |
| Who keeps a tip? | The provider who served the customer, or a shared pool | Employers, managers and supervisors may not keep employees' tips |
| Is there a tip pool? | Who is in it and how it is split (hours, services, equal shares) | With a tip credit, only customarily tipped staff may share; without one, other non-managers may be included |
| Card tips | Whether the processing fee is deducted from card tips | The deduction may not exceed the actual fee, and some states ban it |
| Tip credit | Whether you pay a lower cash wage plus tips | At least $2.13 an hour in cash wage, a maximum credit of $5.12, and written or oral notice to the employee first |
| What customers see | One line at checkout and on the website | None federally; keep it consistent with what staff say |
Wording for customers
- Tips welcome: "Tips are appreciated and go directly to your provider. They are never expected."
- Pooled tips: "Tips are shared among the team who cared for you today, including the front desk."
- No tips: "Our prices include fair pay for our team, so we don't accept tips. A review or referral means a lot."
- Suggested amounts on the screen: offer a "No tip" or "Custom" button as plainly as the percentage buttons.
Why it works
Customers already feel the pressure. In a Pew Research Center survey of 11,945 U.S. adults in August 2023, 72% said tipping is expected in more places than it was five years earlier, and 40% opposed businesses suggesting tip amounts at checkout, compared with 24% who favored it.
A haircut sits near the top of that list, so salon and barbershop customers mostly arrive expecting to tip, while customers of a bookkeeper, a dog walker or a cleaning company may not know what is expected. A clear line at checkout removes the guesswork for both, and a written pool policy settles the question staff ask most, which is where the money goes.
Sources
- U.S. Department of Labor, Wage and Hour Division. Fact Sheet #15: Tipped Employees Under the Fair Labor Standards Act (FLSA).
- Pew Research Center. Tipping Culture in America: Public Sees a Changed Landscape. 2023. 11,945 U.S. adults, surveyed Aug. 7 to 27, 2023.
Related reading: Commission, Hourly or Booth Rent: Pay Models for Salons · Checkout Is a Service Moment: Payment, Receipts and the Last Impression · Clear Policies for Massage and Wellness Studios
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