Tips are wages, not extras
Once a tip is given to a crew member, it's generally treated as income subject to the same tax rules as any other wage. Cash tips that never touch payroll records can create a real gap between what's actually earned and what's reported — a gap that becomes a problem in an audit or a wage dispute.
Tip pooling among crew
Many moving companies pool tips and split them evenly, or by role, across the crew on a job. This is generally allowed, but a few things matter:
- Only employees who actually did the work should share in the pool — supervisors or owners are often excluded under wage rules
- The pooling method should be consistent and documented, not decided ad hoc after each job
- Pooled tips still count as wages for each individual and should flow through payroll reporting
Building this into payroll
The cleanest approach: have crew report tips received on each job, record them in your payroll system alongside hours worked, and let the software handle tax withholding on the combined total — rather than treating tips as an off-books cash side payment.
Ready to stop doing this by hand? See how Gusto handles it automatically for a moving crew.
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