Indiana § 22-2-2-14.1 - Tip pooling arrangements

§ 22-2-2-14.1. Tip pooling arrangements

Sec. 14.1. (a) The following definitions apply throughout this section:

(1) "Manager or supervisor" means any employee:

(A) whose primary duty is managing the enterprise or a customarily recognized department or subdivision of the enterprise;

(B) who customarily and regularly directs the work of two (2) or more other full-time employees or their equivalent; and

(C) who has the authority to hire or fire other employees, or whose suggestions and recommendations as to the hiring or firing are given particular weight.

The term includes a business owner who owns at least a bona fide twenty percent (20%) equity interest in the enterprise in which the owner is employed and who is actively engaged in its management.

(2) "Nontipped employee" means a person employed in an occupation in which the person does not customarily and regularly receive tips, such as a dishwasher, cook, or janitor. The term does not include a manager or supervisor, even if the manager or supervisor would otherwise be considered a tipped or nontipped employee.

(3) "Tip" means a sum presented to an employee by a customer as a gift or gratuity in recognition of some service performed, directly or indirectly, for the customer. The term does not include a mandatory service charge.

(4) "Tipped employee" means a person employed in an occupation in which the person customarily and regularly receives tips, such as a waiter, bellhop, counter server (who serves customers), busser, barback, food runner, hostess, bartender, or a service bartender. The term does not include a manager or supervisor, even if the manager or supervisor would otherwise be considered a tipped or nontipped employee.

(5) "Tip pooling arrangement" means a system in which tips received by an employee are shared with other eligible employees.

(b) An employer may require a tip pooling arrangement under the following circumstances:

(1) An employer may require a tipped employee to participate in a tip pooling arrangement if the tips are shared only with other tipped employees, and with no nontipped employees. An employer that implements a tip pooling arrangement must notify tipped employees of any required tip pool contribution amount, may only take a tip credit for tips each employee ultimately receives, and may not retain any of the employees' tips for any other purpose.

(2) If the employer pays its employees at least the minimum wage, the employer may require a tipped employee to participate in a tip pooling arrangement where the tips are shared with other tipped and nontipped employees. An employer that implements a tip pooling arrangement must notify employees of any required tip pool contribution amount and may not retain any of the employees' tips for any other purpose.

Under no circumstances may an employer receive tips from a tip pooling arrangement or permit a manager or supervisor to receive tips from a tip pooling arrangement.

(c) For purposes of determining whether a person is employed in an occupation in which the person customarily and regularly receives tips (as used in the definition of "tipped employee" under subsection (a)), the trier of fact shall consider the effect a person's job duties, efficiency, and service have on a customer's willingness and tendency to tip. A customer's willingness and tendency to tip may be affected by a person's work that directly supports or is itself the service function for which a customer would tip, regardless of whether the person personally performs the service function. Direct customer interaction is not a requisite or a determinative factor.

(d) The general assembly intends for this section to apply retroactively to remedy a legal issue that arose following Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024), handed down on June 28, 2024.

As added by P.L.15-2026, SEC.1.

IC 22-2-3Chapter 3. RepealedRepealed by Acts 1978, P.L.2, SEC.2251.

IC 22-2-4Chapter 4. Regulation of Wage Payments

22-2-4-1"Financial institution" defined; payment; void contracts; exceptions 22-2-4-2Scrip; offense 22-2-4-3Merchandise or supplies; sale to employees at higher price 22-2-4-4Failure to pay; fines and penalties; damages 22-2-4-5Repealed 22-2-4-6Liens for work; application of law