On December 5, the Department of Labor published a Notice of Proposed Rulemaking to reverse its 2011 rule prohibiting employers from sharing tips obtained by service workers with non-tipped staff.
The proposed rule would allow employers who pay at least minimum wage (without taking a tip credit) to share tips through a tip pool with employees who do not traditionally receive direct tips — such as restaurant cooks, dishwashers, and other “back of the house” employees. The proposed rule could arguably even allow an employer to pocket the tips altogether.
The proposed rule would not affect employers who claim a tip credit under the Fair Labor Standards Act. Any employer claiming a tip credit would still be prohibited from requiring tip pooling with non-tipped workers.
The Department’s press release for the proposed rule stated that employers would now “have the freedom to allow sharing of tips among more employees,” which would “help decrease wage disparities between tipped and non-tipped workers.” The Department also raised concerns about the significant amount of litigation involving tip pooling since the 2011 rule was implemented, which has placed enforceability of the current law into question with a split in the Circuit Courts of Appeal.
The proposed rule will be available for public comment for a 30-day period, which the Department of Labor must review per federal rulemaking procedure. Employers should wait until the rule is finalized before taking action, and even then, should carefully consider any alternative state-specific laws that may impact the proposed Department of Labor rule.
This blog is made available by Foley & Lardner LLP (“Foley” or “the Firm”) for informational purposes only. It is not meant to convey the Firm’s legal position on behalf of any client, nor is it intended to convey specific legal advice. Any opinions expressed in this article do not necessarily reflect the views of Foley & Lardner LLP, its partners, or its clients. Accordingly, do not act upon this information without seeking counsel from a licensed attorney.
This blog is not intended to create, and receipt of it does not constitute, an attorney-client relationship. Communicating with Foley through this website by email, blog post, or otherwise, does not create an attorney-client relationship for any legal matter. Therefore, any communication or material you transmit to Foley through this blog, whether by email, blog post or any other manner, will not be treated as confidential or proprietary.
The information on this blog is published “AS IS” and is not guaranteed to be complete, accurate, and or up-to-date. Foley makes no representations or warranties of any kind, express or implied, as to the operation or content of the site. Foley expressly disclaims all other guarantees, warranties, conditions and representations of any kind, either express or implied, whether arising under any statute, law, commercial use or otherwise, including implied warranties of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Foley or any of its partners, officers, employees, agents or affiliates be liable, directly or indirectly, under any theory of law (contract, tort, negligence or otherwise), to you or anyone else, for any claims, losses or damages, direct, indirect special, incidental, punitive or consequential, resulting from or occasioned by the creation, use of or reliance on this site (including information and other content) or any third party websites or the information, resources or material accessed through any such websites.
In some jurisdictions, the contents of this blog may be considered Attorney Advertising. If applicable, please note that prior results do not guarantee a similar outcome. Photographs are for dramatization purposes only and may include models. Likenesses do not necessarily imply current client, partnership or employee status.