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- Category: Employment Law
Under Minnesota law your tips are your property, not your employer’s. An employer that keeps them, requires you to share them, or makes an unauthorized deduction from them is taking money that the statute assigns to you.
Tips are also named expressly in the remedy provision, which means a tip claim does not have to be argued into a wage claim by analogy.
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The Rule That Decides It
Minn. Stat. § 177.24, subd. 3 provides that any gratuity received by an employee, or deposited in or about a place of business for personal services rendered by an employee, is the sole property of the employee.
That is an ownership rule rather than a payment rule, and the distinction matters. An employer withholding tips is not simply paying you late. It is holding property the statute says is yours, which is why the section goes on to prohibit the employer from requiring you to contribute or share a gratuity with the employer or with other employees, or to contribute to a fund or pool operated for the benefit of the employer or employees.
The Common Ways Tips Go Missing
| What happens | The provision it runs into |
|---|---|
| Mandatory tip pool, or participation required as a condition of the job | § 177.24, subd. 3, and Minn. R. 5200.0080, subp. 4 |
| The house or the employer takes a share | § 177.24, subd. 3, sole property and no pool operated for the employer’s benefit |
| Managers or supervisors receive a share of the pool | Federal FLSA § 3(m)(2)(B), 29 CFR 531.52(b)(2) and 531.54. A manager may keep a tip for service they directly and solely provided |
| Card processing fee deducted from card tips | § 177.24, subd. 3a, full amount must be distributed |
| Card tips paid out late or held for weeks | § 177.24, subd. 3a, no later than the next scheduled pay period |
| Service charge retained with no clear and conspicuous notice to customers | § 177.23, subd. 9, and Minn. R. 5200.0080, subps. 4a and 4b |
| Walkouts, breakage or register shortages charged against tips | § 177.24, subd. 4, deductions from wages or gratuities |
| Tips counted toward the minimum wage | § 177.24, subd. 2, no tip credit |
Source: Minn. Stat. § 177.24, Minn. Stat. § 177.23, subd. 9, and Minn. R. 5200.0080. The manager and supervisor row rests on federal law: Fair Labor Standards Act § 3(m)(2)(B), 29 CFR 531.52(b)(2) and 29 CFR 531.54. Verified September 5, 2026.
One row in that table runs on federal rather than Minnesota law. The prohibition on managers and supervisors taking a share of pooled tips comes from the Fair Labor Standards Act, which bars an employer from allowing managers or supervisors to keep any portion of an employee’s tips and bars them from receiving tips from a tip pool. The exception is that a manager or supervisor may keep a tip received directly from a customer for service they directly and solely provided, and who counts as a manager or supervisor is defined by reference to the federal executive duties test rather than by job title.
The last row is worth separating too. Where an employer treats tips as satisfying part of the minimum wage, the shortfall is in your hourly wages rather than in your tips, and both problems can exist on the same pay stub.
What the Department Can Do
Section 177.24, subd. 3 gives the commissioner a specific power for tip cases. The commissioner may require the employer to pay restitution in the amount of the gratuities diverted.
It goes further where the records are poor. If the records maintained by the employer do not provide sufficient information to determine the exact amount of gratuities diverted, the commissioner may make a determination of gratuities diverted based on available evidence and mediate a settlement with the employer.
One thing about that provision is worth keeping straight. It is a statutory enforcement power describing what the commissioner may do, rather than a rule about how proof works in a private lawsuit, which is a separate question governed by case law. The two are frequently merged in general summaries and they should not be.
What a Private Action Can Do
Minn. Stat. § 177.27, subd. 8 allows an employee to bring a civil action directly in district court for violations of sections 177.21 to 177.44, which includes the gratuities provisions.
The remedy language names tips specifically. An employer who pays an employee less than the wages and overtime compensation to which the employee is entitled is liable for the full amount of the wages, gratuities and overtime compensation, less any amount the employer establishes was actually paid, and for an additional equal amount as liquidated damages.
Subdivision 10 makes costs and attorney fees mandatory. In an action brought under subdivision 8, the court shall order an employer found to have committed a violation to pay the employee reasonable costs, disbursements, witness fees and attorney fees. And subdivision 9 provides that the action may be brought by one or more employees, which matters here because a tip pool or a processing fee deduction can apply to everyone on the floor rather than to one server.
Deductions Against Tips Are Separately Restricted
An employer may concede that tips belong to the employee and then charge things against them anyway. Walkouts, broken glassware, register shortages and uniform costs are common examples.
Section 177.24, subd. 4 addresses this by naming gratuities alongside wages. Deductions, direct or indirect, from wages or gratuities that are not authorized by that subdivision may only be taken as authorized by Minn. Stat. §§ 177.28, subd. 3, 181.06 and 181.79. Section 181.79 in particular governs deductions for alleged loss or damage and has its own requirements about when authorization must be given.
What Helps Prove It
Tip claims are typically built from a combination of documents and pattern.
Your earnings statements, which should show gratuities reported for each pay period. Point of sale reports or closeout slips if you have kept them, since these show the card tips actually charged to customers. The written tip policy, pool arrangement or house rules, particularly anything describing participation as required. Schedules showing who worked the same shifts. Messages or postings announcing a pool, a fee, or a change to distribution. And the accounts of coworkers, because a pool, a fee or a distribution rule can apply to more than one person.
Where card tips are involved the arithmetic can be straightforward, since the difference between the gratuity indicated on the customer’s payment and the amount that reached you is a documented figure.
Deadlines and Retaliation
The limitations period for this kind of claim is two years under Minn. Stat. § 541.07, clause (5), with a third year available if the employer did not produce payroll records the department requested by a set date, or if the shortfall was willful rather than accidental. Either path to the longer period deserves a look before concluding that older pay periods are unreachable.
Asserting these rights is separately protected. Minn. Stat. § 181.03, subd. 6 bars an employer from firing, disciplining, or otherwise retaliating against an employee for invoking sections 177.21 to 177.44 — including simply telling the employer a complaint is coming — and sets a civil penalty running from $700 to $3,000 per violation.
If you work in Saint Paul, withholding tips is one of the practices the city expressly identifies as wage theft, which opens a local route alongside the state one, and our page on unpaid wages in St. Paul covers it. You are owed the full applicable minimum wage regardless of tips, and our page on unpaid wages in Minneapolis explains how a claim is brought.
Frequently Asked Questions
Can my employer legally take a cut of my tips?
Section 177.24, subd. 3 makes gratuities the sole property of the employee who receives them and prohibits an employer from requiring an employee to share a gratuity with the employer or to contribute to a pool operated for the employer’s benefit. An employer taking a cut is acting against that provision.
What can I recover if my tips were withheld?
The department’s tool is restitution: the commissioner can order the diverted gratuities paid back. A private lawsuit under § 177.27, subd. 8 reaches further — the wages, gratuities and overtime owed, minus whatever was actually paid, matched by an equal amount in liquidated damages, and subdivision 10 puts the employee’s costs and attorney fees on the employer as well.
My employer says the tip pool is company policy. Does that make it lawful?
A policy cannot authorize what the law prohibits. Requiring contribution to a pool, or making participation a condition of employment, is what Minn. Stat. § 177.24, subd. 3 and Minn. R. 5200.0080, subp. 4 prohibit. Voluntary sharing arranged by employees without employer coercion or participation is different. Separately, federal law prohibits managers and supervisors from receiving a share of pooled tips whatever the policy says.
What if the restaurant never kept proper tip records?
That does not end the claim. Section 177.24, subd. 3 allows the commissioner to determine gratuities diverted based on available evidence where the employer’s records are insufficient. In a private action, proof is built from card records, earnings statements, schedules and testimony.
Can I be fired for asking about this?
Retaliation is independently unlawful under Minn. Stat. § 181.03, subd. 6, with its own $700–$3,000 civil penalty per violation. You do not have to win the underlying tip claim for a retaliation claim to stand on its own.
This article provides general information about Minnesota law and is not legal advice. Whether a particular tip practice is lawful depends on facts specific to your workplace and your pay records.
