New duties-based standard changes the tipped-employee analysis and carries implications for tip credits and tip pools.
Effective April 10, 2026, Kentucky changed its definition of a “tipped employee”. Kentucky replaced a money-based test with additional duties standards that look at what the employee actually does. Under the prior Kentucky law, a worker in an occupation that “customarily and regularly receives more than thirty ($30) per month in tips” fell under the definition of “tipped employee”.
The new definition adds to that existing standard. In addition to being engaged in an occupation that regularly receives $30 a month in tips, the worker must also perform work that “supports or is itself the service function for which a customer would tip, regardless of whether the employee performs the service function; or directly supports the service function that involves any amount of direct customer interaction or is performed in the direct line of sight of customers.”
Kentucky law also changed to clarify that “A tip pooling arrangement may include tipped employees. A tip pooling arrangement shall not include salaried employees, managers, or supervisors.”
These changes follow a September 30, 2025, Department of Labor opinion letter that addressed whether a restaurant’s front-of-house oyster shuckers could be included as part of a tip pool. The Department of Labor found that the front-of-house oyster shuckers engaged in service-related functions and had sufficient interaction with the customers who left tips by detailing offerings, making suggestions, and fielding questions. Thus, they were allowed to be part of a tip pool with other tipped employees. The DOL reminded us that employees do not have to receive tips directly from customers to be included in a traditional tip pool.
In the same vein, Kentucky’s new rule clarifies that tipped employees may include more than just servers, bartenders, and employees who receive tips directly from customers. Employers who take a tip credit towards minimum wage obligations should be mindful of which employees qualify as “tipped employees” and which do not, and should also be mindful of the impact this may have on tip pools.
Bricker Graydon Wyatt’s experienced Labor & Employment team can help employers assess tipped-employee classifications, tip-credit practices, and tip-pooling arrangements.
