Pizza Hut managers face stricter federal rules on employee tips

A dinner-rush tip jar can turn into a wage case fast. In one recent enforcement action, the Labor Department said it recovered $129,000 in tips and damages from a Round Table Pizza franchise operator in Vancouver, Washington, after managers were allowed into the tip pool.

That warning lands squarely in Pizza Hut stores, where shift leaders, assistant managers and restaurant managers often blur the line between crew work and supervision. Federal rules say the title on the schedule does not control who may keep tips. For tip purposes, the Labor Department uses the executive duties test, not the job label alone, to decide whether someone is a manager or supervisor.

Under that standard, a manager or supervisor may not keep any portion of other employees’ tips, whether the money comes through a tip pool or a tip jar. The agency says the worker must direct at least two employees, have authority that carries weight in hiring or firing, and have a primary duty of managing the business or a recognized subdivision. A leader who jumps on the make line, answers phones or helps with deliveries during a rush does not automatically become eligible to share in the tips collected by drivers or crew.

The Labor Department has also said that managers or supervisors may keep only the tips they receive directly from customers for service they directly and solely provide. Its 2025 opinion letter applied that framework to a quick-service restaurant that used job titles such as Crew Members, Shift Leads, Assistant Team Leads and Team Leaders, and said the prohibition applies whether or not the employer takes a tip credit.

That matters because the tipped-worker rules are narrow. An employer can take a tip credit only for employees who customarily and regularly receive more than $30 a month in tips. The federal minimum wage remains $7.25 an hour, and the maximum tip credit is $5.12 an hour. The Labor Department also says employees generally keep all their tips unless they are in a valid pool limited to workers who customarily and regularly receive tips.

The financial risk is not theoretical. In February 2024, Portland-based Pizzicato restaurants were ordered to pay $540,202 after managers were illegally included in tip pools, affecting 367 employees across 11 restaurants. In July 2024, the department said it recovered $64,681 in unpaid tips, another $64,681 in liquidated damages and $28,548 in penalties from the Round Table Pizza case, affecting 52 employees.

Pizza Hut’s scale makes the issue harder to ignore. The company says it operates more than 19,000 restaurants in 108 countries and is the second-largest pizza chain in the world. It also says the delivery charge is not a driver tip and that 100% of the delivery fee is retained by the restaurant. In a franchise system that large, the safest line is still the simplest one: managers may run the shift, but they cannot take the tips.