What the law says about a tip.

Under the Fair Labor Standards Act (FLSA), a tip is money a customer gives voluntarily, in an amount the customer decides — not a mandatory service charge. The tip belongs to the employee who earned it. An employer, manager, or supervisor may never keep any part of it, even temporarily, except to run a valid tip pool among tipped employees.

• Voluntary and customer-set. If the amount is fixed by the business and mandatory (an auto-added "service charge"), the FLSA treats it as a service charge, not a tip — different rules apply, and it is not automatically owed to the worker.
• A guest note is not a tip. A written comment or star rating carries no legal weight here — it only becomes a tip when money moves.

A "tip credit" lets an employer count part of an employee's tips toward the minimum wage it owes that employee, so the direct cash wage paid can be lower than the full minimum wage — as long as tips make up the rest. If a tipped employee's cash wage plus tips falls short of the full minimum wage in any workweek, the employer must pay the difference.

Florida's state minimum wage has been rising each September under a voter-approved schedule. It reached $14.00/hour on September 30, 2025, and is set to rise to $15.00/hour on September 30, 2026 — at which point the tipped cash-wage floor moves to $11.98/hour, with the tip credit staying at $3.02.^[1][2]

Federal law sets a separate floor underneath all of this ($7.25/hour minimum, $2.13/hour tipped cash wage, $5.12 tip credit) — Florida's higher state rate is the one that actually applies here.^[3]

A tip pool can only include employees who customarily and regularly receive tips — think servers, bartenders, bussers, hosts, and similar front-of-house roles.

• Owners, managers and supervisors are excluded, always. The 2018 FLSA amendment made this explicit: a manager or supervisor may never keep any portion of a pooled tip, whether or not the employer takes a tip credit.
• Back-of-house pooling is allowed only without a tip credit. If an employer pays the full minimum wage (no tip credit taken), it may include traditionally non-tipped roles like cooks and dishwashers in a mandatory tip pool. If it takes a tip credit, the pool must stay limited to customarily-tipped employees.

The FLSA requires an employer to keep records of tips reported, hours worked, and any tip credit claimed — generally for at least three years, and Florida's own recordkeeping rule tracks the federal one.

Every tip, pool split, and payout on MidBank Tipping writes a timestamped row to a dedicated money audit log — separate from the balances shown on screen, and never edited after the fact. It exists so a tip, a pool share, or a payout can be reconstructed later, not just trusted in the moment.

Tips paid to a W-2 employee are wages — they belong on that employee's W-2, not a 1099. A 1099-NEC or 1099-K only applies to someone who is genuinely an independent contractor, or to certain payment-network reporting thresholds, depending on how they were paid.

MidBank Tipping's tax center gives each worker a running summary of what moved through their own tip pages during the year. Whether that worker is a W-2 employee or an independent contractor for tax purposes is a fact about their employment, not something a tipping app decides — check with a CPA if it isn't already clear.

1. U.S. Department of Labor, Wage and Hour Division — Minimum Wages for Tipped Employees. Federal and state-by-state tipped minimum wage and tip-credit table, including Florida's rate. dol.gov/agencies/whd/state/minimum-wage/tipped
2. Florida Restaurant & Lodging Association — Current Florida Minimum Wage. Source of the $14.00 state minimum, $10.98 tipped cash wage, $3.02 tip credit, and the scheduled September 30, 2026 rise to $15.00/$11.98. frla.org/minimum-wage
3. U.S. Department of Labor — Fact Sheet #15: Tipped Employees Under the FLSA. Federal tip-credit rules, the 2018 amendment barring managers/supervisors from tip pools, and the back-of-house pooling distinction. dol.gov/agencies/whd/fact-sheets/15-tipped-employees-flsa