- Trump-era regulations prohibiting managers from keeping tips and allowing employers to include non-tipped workers in certain tip pools will take effect April 30 as scheduled, the U.S. Department of Labor announced Tuesday.
- The agency also proposed, however, to delay other portions of that rulemaking a second time, to Dec. 31. Specifically, DOL said it wants to revisit provisions affecting civil money penalties and the application of the Fair Labor Standards Act's tip credit to tipped employees who perform both tipped and non-tipped duties.
- "The proposals we announced today ensure that we consider all of the circumstances in today's rapidly changing workplace," said Wage and Hour Division Deputy Administrator Jessica Looman in a statement. "These essential workers deserve our careful and thoughtful consideration as we craft and implement rules that affect their well-being."
Tip rules have been in flux in recent years. Generally, the FLSA requires that employers permit workers to retain gratuities, but allows for some tip pooling.
In 2011, former President Barack Obama's DOL issued rules prohibiting tip pools that included non-tipped employees, even if employers also paid all workers involved minimum wage. (Employers with tipped employees can take a "tip credit," applying some gratuities toward minimum wage obligations.) Federal circuit courts split on that specific issue, with one declaring the regs invalid.
Despite the Biden administration's pro-worker stance, the agency said it will allow the Trump-era plan to reverse that rule to take effect in just a few weeks. Employers will soon be cleared to operate tip pools that include both tipped and non-tipped employees as long as all involved are paid minimum wage. In other words, employers may not take a tip credit based on those gratuities.
While tipping pools can help increase back-of-house wages, it takes control of tips away from front-of-house workers. Even though the rule bans employers and managers from pocketing the tips, servers would earn less per table. If a tip pool includes tipped and nontipped workers, however, all of these employees must be paid at least the federal minimum wage of $7.25 per hour — not a mix of sub-minimum wage and minimum wage pay.
The Biden administration also hopes to delay and revisit, however, the Trump administration's attempt to change limits on when employers can take a tip credit for an employee who performs both tipped and untipped work, known as the "dual job" or "80/20" rule.
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