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Volume XI, Number 270

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Proposed Department of Labor Rule Revising Tip Pooling Rules

On December 4, 2017, the Department of Labor (“DOL”) proposed a rule that will rescind the 2011 regulation prohibiting restaurants, bars, and other service industry employers from requiring front-of-house employees, such as servers, to share tips with back-of-house workers, such as cooks and dishwashers. 

The current rule does not require tipped employees to share their tips with non-tipped employees; however, the proposed rule, which was first announced in July, will allow employers to require tipped employees to split tips with their co-workers. “The proposal would help decrease wage disparities between tipped and non-tipped workers,” the DOL said in a statement Monday. 

Under the Fair Labor Standards Act (FLSA), the federal law which governs minimum wage and overtime, employers may take what is called a “tip credit,” meaning they can pay tipped employees less than the minimum wage (the federal tipped minimum wage $2.13 however some states require more) so long as the tips earned by a given employee will increase their wage rate to at least $7.25 an hour (or the state minimum wage, if higher).  Under the DOL’s new rule, employers may choose to not take a tip credit by paying all employees minimum wage. If an employer pays everyone minimum wage, the employer could decide how to split tips received from customers as the tips would no longer be the property of the employee. 

The proposed rule only applies to employers who pay tipped employees at least the federal minimum wage of $7.25 an hour (or the state minimum wage, if higher than the federal minimum wage) and allow compensation sharing through a “tip pool” with employees who usually do not receive tips, such as cooks and dishwashers.

The DOL will accept public comments on the proposed regulation for 30 days (until January 4, 2018). 

© Polsinelli PC, Polsinelli LLP in CaliforniaNational Law Review, Volume VII, Number 342
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About this Author

Robert J. Hingula, Polsinelli, Education Matters Lawyer, Discipline Procedures Attorney
Shareholder

Robert Hingula primarily focuses his practice on trial and counseling work involving labor and employment law.  Most recently, he has devoted a significant amount of his practice to representing employers in various industries in collective actions brought pursuant to the Fair Labor Standards Act.  As part of his representation, Mr. Hingula has advised and assisted clients with restructuring their compensation policies to comply with state and federal wage and hour laws.  Some of the industries Mr. Hingula has represented and counseled in wage and hour issues include...

816.572.4469
Associate

Latrice Lee brings unique perspective to client work that is based on her previous retail management experience. She works on behalf of clients to respond to EEOC Charges, governmental agencies, as well as defend against law suits filed against them.

As a recent graduate of North Carolina Central University School of Law, Latrice joined Polsinelli due to its reputation for successfully trying cases in the courtroom, as well as for its reputation of vigorously defending clients in arbitration and mediation proceedings.

...

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