New Tip-Pooling Rules on the Horizon

Yesterday the comments period ended on a proposal from the U.S. Department of Labor (DOL) regarding tip-pooling regulations under the Fair Labor Standards Act (FLSA). On December 5, 2017, the DOL published a news release regarding a proposed rule which would give employers greater freedom to allow tip pools and to determine how tips should be distributed to staff, including non-wait staff.

The comments period was originally scheduled to end 30 days after the DOL announced the proposal on December 5, 2017, but was extended to February 5, 2018 after the proposal gained widespread attention. The proposed regulation received 374,064 comments.

The current FLSA tip-pooling regulations prohibit redistribution of tips by the employer to an employee other than the one who originally earned and received the tips. The new DOL proposal would rescind these regulations to allow employers to make different rules regarding the distribution of tips to employees who do not traditionally receive tips. If the DOL adopts the proposal, employers could only take advantage of the new rule if they pay the full minimum wage to their employees and do not take a tip credit against payment of minimum wage.

The DOL release is available at https://www.dol.gov/newsroom/releases/whd/whd20171204.

Takeaway: Employers may see changes to federal regulations regarding tip-pooling in the near future. However, employers should be aware that specific state laws may still govern their business and may provide for separate regulations regarding tip pools.

About Kristin Emmons

Kristin Emmons is an associate in Briggs and Morgan's Employment, Benefits and Labor section. Kristin earned her law degree with a concentration in business law from the University of Minnesota Law School, magna cum laude, where she served as an admissions ambassador, and was active in the Business Law Association, and the Litigation and Trial Advocacy Group. While in law school, she participated in Intellectual Property Moot Court as a director and competitor, and won the Regional Moot Court Competition in 2017. She earned a bachelor of business administration in management and a bachelor of arts in political science from the University of North Dakota, both summa cum laude, where she was involved in Student Senate, University Senate, and was a member of the Beta Gamma Sigma honor society and the Phi Beta Lambda organization. Kristin was a 2016 summer associate at Briggs.

Posted on February 6, 2018, in Uncategorized, Wage and Hour and tagged , . Bookmark the permalink. Comments Off on New Tip-Pooling Rules on the Horizon.

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