Indiana Enacts Tip Pooling Law Retroactive to 2024
Indiana lawmakers have passed a new legislation that clarifies when employers can require tip pooling. Senate Bill 245 was enacted February 24, 2026, allowing tip pooling under certain conditions and applies retroactively to June 27, 2024.
Under the law, employers may require tipped employees to participate in a tip pool. If an employer takes a tip credit toward the minimum wage, pooled tips may only be shared among employees who customarily receive tips. If the employer pays employees at least minimum wage, tips may be shared with both tipped and non-tipped employees.
The law also sets several requirements. Employers must notify employees about required tip contributions, may only claim a tip credit for tips employees actually receive, and cannot keep any portion of employee tips. Managers and supervisors are also prohibited from receiving tips from the pool.
The legislation also clarifies that an employee’s job duties and their impact on a customer’s decision to leave a tip may be considered when determining whether the worker qualifies as a tipped employee.
Source: Indiana General Assembly. (2026). Senate Bill 245 – Tip Pooling Arrangements. https://iga.in.gov/legislative/2026/bills/senate/245