Newly Proposed Federal Rule Allows For Greater Tip-Sharing Amongst Restaurant Employees

By December 6, 2017Articles

On December 4, 2017, the U.S. Department of Labor announced a Notice of Proposed Rulemaking (NPRM) regarding the tip regulations under the Fair Labor Standards Act (FLSA). Under the proposed rule, workplaces would have the freedom to allow sharing of tips among more employees. The proposal would help decrease wage disparities between tipped and non-tipped workers – an option that is currently restricted by a rule promulgated in 2011 under the Obama Administration that has been challenged in a number of courts.

The Department’s proposal only applies where employers pay a full minimum wage, do not take a tip credit (which is prohibited under California state law) and allow sharing tips through a tip pool with employees who do not traditionally receive direct tips – such as restaurant cooks and dishwashers. These “back of the house” employees contribute to the overall customer experience and as recognized under California law, are in the general chain of service, entitling them to share and receive tips.

Promulgation of the DOL’s proposed rule will result in federal law being in alignment with California law regarding tip-pooling for all restaurant employees in the chain of service, except managers and supervisors who may not receive tips. Presently, the DOL prohibits tip sharing with “back of the house” restaurant workers that do not provide table-side service.

The NPRM will be published in the Federal Register on Dec. 5, 2017, and will be available for public comment for 30 days. The Department encourages interested parties to submit comments on the proposed rule. The NPRM, along with the procedures for submitting comments, can be found at the Wage and Hour Division’s Proposed Rule website.

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