Tip pooling., the official text

Second Regular Session of the 124th General Assembly (2026)

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  SENATE ENROLLED ACT No. 245

   AN ACT to amend the Indiana Code concerning labor and safety.

   Be it enacted by the General Assembly of the State of Indiana:

   SECTION 1. IC 22-2-2-14.1 IS ADDED TO THE INDIANA CODE
AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JUNE
27, 2024 (RETROACTIVE)]: 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

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      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

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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.

   SECTION 2. An emergency is declared for this act.

SEA 245
President of the Senate

President Pro Tempore

Speaker of the House of Representatives

Governor of the State of Indiana

Date:                             Time:

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