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Committee backs bill to codify tip‑pooling rules, backdating to reduce lawsuits
Summary
Senators approved SB 245 to define who may participate in tip pools and to backdate the rules to reduce litigation risk after recent federal changes; supporters said it protects tipped workers and hospitality operations.
The Pensions and Labor Committee approved Senate Bill 245 on a unanimous roll call after sponsor Senator Freeman said the bill would codify current practice and clarify who may participate in tip pools.
Senator Freeman described tip pooling as a team practice in restaurants and said recent federal and Supreme Court developments created legal uncertainty. "What this bill would do is codify federal regulations and say tip pooling's appropriate," he said, adding that the measure is retroactive to limit lawsuits. Freeman told the committee the bill aims to "end that situation" that has produced litigation and to avoid forcing restaurants to defend themselves at great cost.
Matt Bell, testifying on behalf of Tony's Steakhouse, told the committee that "courts in Indiana relied on federal regulations to determine who qualified... We had a Supreme Court decision that told Indiana courts you can't look to federal regulation anymore. And our law isn't clear." Bell said state law must plainly define who can participate in tip pools to avoid ambiguity that invites class actions.
Senator Hahnley cited the hospitality sector's size in her district — she referenced "83,000 people" and a "$5,000,000,000 industry" — and asked whether the bill would prevent managers from taking tipped employees' money. Freeman pointed to bill language excluding managers and supervisors and requiring that non‑tipped employees who join a pool be paid at least the minimum wage.
After the brief testimony and discussion, the committee moved the bill and the clerk announced SB 245 passed by voice and roll call, 10‑0.
The bill will continue through the legislative process; sponsors said the text is intended to clarify participation rules and reduce litigation exposure for restaurants and other tipped establishments.
