On December 22, 2020, the U.S. Department of Labor (DOL) issued its final rule modifying federal regulations concerning compensation for “tipped employees.” The new final rule follows 2018 federal legislation, which amended the Fair Labor Standards Act (FLSA) to, among other things, prohibit employers from keeping their employees’ tips “for any purposes, including allowing managers or supervisors to keep any portion of employees’ tips” even if they do not claim a tip credit.
Continue Reading Share The Tip Jar: Department of Labor Finalizes Rule Opening Tip Pooling To Back-of-the-House Workers
Tip Pooling
New Tip Pooling Guidelines For Employers
The recent passage of the Consolidated Appropriations Act of 2018 (“H.R. 1625”), an 878-page omnibus spending bill, significantly changes the rules for tip pooling under the Fair Labor Standards Act (the “FLSA”). While the conditions for taking a tip credit toward federal minimum wage obligations remain essentially unchanged, H.R. 1625 appears to permit the inclusion of a larger group of employees in tip pools when a tip credit is not taken. At the same time, H.R. 1625 still prohibits an employer from keeping any portion of the tips received by its employees and expands the scope of remedies and penalties available for violations of the tip rules.
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Ninth Circuit Limits Tip Pooling to Customarily Tipped Employees
In a decision with important implications for employers throughout the service industry, the federal Ninth Circuit Court of Appeals ruled on February 23 that employers cannot implement policies requiring tipped employees to share their tips with untipped employees. The 2-1 decision in Oregon Restaurant & Lodging Assoc. v. Perez, — F.3d –, No. 13-25765 (9th Cir. Feb. 23, 2016) (“Oregon Restaurant”) upheld a regulation issued by the federal Department of Labor (“DOL”) in 2011 and reversed trial court decisions to the contrary from Oregon and Nevada.
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