Can a Illinois employer take a tip credit?

Yes. As of January 1, 2026, Illinois allowed a maximum tip credit of $6.00 per hour, making the tipped cash wage $9.00 against a minimum wage of $15.00. Rates change, so confirm the current figure with the Illinois Department of Labor.

Can back-of-house be in the tip pool in Illinois?

Not while a tip credit is being taken. If the employer pays the full minimum wage in cash and takes no tip credit, a pool including back-of-house becomes permissible under federal law. Managers and supervisors are excluded either way.

Can managers take a share of tips in Illinois?

No. Under the federal Fair Labor Standards Act, managers and supervisors may not participate in a mandatory tip pool anywhere in the United States, even if they perform tipped work themselves. They may keep only tips from customers for service they directly and solely provided.

IL · State guide

Tip pooling and tip credit laws in Illinois

Q: Is tip pooling legal in Illinois?

Yes, within limits. Illinois allows a tip credit of up to 40% of the minimum wage — but the City of Chicago is phasing its tip credit out entirely. Under federal law that applies everywhere, managers, supervisors, and owners may never share in a mandatory tip pool. Where an employer takes a tip credit, the pool is limited to customarily tipped front-of-house employees; back-of-house may not be included. Confirm current rules with the Illinois Department of Labor.

Reviewed September 25, 2026 · General information, not legal advice · Rates verified against the Illinois Department of Labor

Illinois allows a tip credit of up to 40% of the minimum wage — but the City of Chicago is phasing its tip credit out entirely.

Managers, supervisors, and owners may never share in a mandatory tip pool — that rule is federal and applies in every state. Where a tip credit is taken, the pool is limited to customarily tipped front-of-house employees.

The numbers

Minimum wage: $15.00State rate
Tipped cash wage: $9.00Before tips
Max tip credit: $6.00Per hour

These figures are as of January 1, 2026 and change — most often each January. Before you rely on a number, confirm it at the source: Illinois Department of Labor →

Who can be in the tip pool

Federal rules apply on top of state rules. Where they differ, the stricter one governs.
Who	In a mandatory pool?	Why
Servers, bartenders, bussers, runners	Yes	Customarily and regularly tipped employees.
Cooks, dishwashers, prep (back of house)	Not while a tip credit is taken	A tip credit is being taken, which limits the pool to customarily tipped staff.
Managers, supervisors, owners	Never	Prohibited by the FLSA nationwide, regardless of how much tipped work they do.

What's different in Illinois

Chicago's One Fair Wage ordinance phases out the tip credit within city limits over several years. A restaurant in Chicago follows a different schedule from one in the rest of Illinois.
Statewide, the tip credit is capped at 40% of the applicable minimum wage.
Where a tip credit is taken, the pool is limited to customarily tipped employees — back-of-house may not be included.
Illinois requires that tips be paid to the employee within 13 days of the end of the pay period in which they were earned.

Service charges are not tips

Illinois does not automatically treat a mandatory service charge as a tip. Chicago has its own disclosure expectations.

This trips people up constantly: a mandatory charge — a party-of-eight auto-gratuity, a banquet fee, a delivery charge — is generally not a tip under federal law. Any part of it paid to employees is wages, which changes overtime math and payroll treatment. If you are running both tips and service charges, keep them in separate columns.

The federal floor, everywhere

State law sits on top of the federal Fair Labor Standards Act. Three federal rules apply in Illinois no matter what:

Tips belong to the employee. The employer cannot keep them, and cannot use them for anything but a valid pool or a lawful tip credit.
Managers and supervisors are always out of the pool. No exceptions for owner-operators who work the floor.
Taking a tip credit narrows the pool. Pay the full minimum wage in cash and back-of-house may be included; take the credit and it may not.

Federal baseline as of January 1, 2026: $7.25 minimum wage, $2.13 tipped cash wage, $5.12 maximum tip credit. Source: U.S. DOL Fact Sheet #15.

What actually protects you: the record

Almost every tip dispute — and almost all of the real legal exposure — comes down to the same thing. Not the percentage. Whether you can show who was working, what was counted, and how it was split. Employers carry the burden of showing that a tipped employee's wages plus tips reached the full minimum wage, and a shoebox of till slips does not do that.

How PaidFair helps. It keeps a per-person record of every tip count and every split, weighted by the minutes each person was actually on the clock, with the arithmetic shown and reconciled to the exact cent. It exports clean hours and tips for payroll. It is your record of what happened — not legal advice, and not a compliance guarantee.

Start free in your browser → Try the tip pool calculator

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Sources and where to confirm

Illinois Department of Labor — the authority for Illinois wage and tip rules.
U.S. DOL Fact Sheet #15 — federal rules for tipped employees.
U.S. DOL — minimum wages for tipped employees by state — the federal side-by-side table.

This is general information, not legal advice. Wage and hour law changes, local ordinances can override state rates, and how these rules apply depends on facts specific to your business. Confirm anything you plan to act on with the Illinois Department of Labor and an employment attorney licensed in Illinois.

Other states

California Washington Oregon Nevada Minnesota Montana Alaska District of Columbia All states →

Federal tip pooling rules How to split tips fairly Tip-outs explained