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DOL Says Tip Pools Can Include Cooks and Dishwashers

The Trump Administration continues to review policies and guidelines issued under the Obama Administration. Restaurant and hospitality employers will recall that the Obama DOL imposed new regulations that restricted tip pooling (the 2012 field bulletin guidance is rescinded). In April, the U.S. Department of Labor (DOL) released updated guidance clarifying the federal law on tip pooling. The updated guidance was issued in direct response to a federal law that amended the federal Fair Labor Standards Act’s (FLSA) tip pooling rules. The DOL new guidance states that:

Employers are prohibited from keeping tips received by their employees, regardless of whether the employer takes a tip credit against the minimum wage for its employees.
Federal regulations no longer prohibit tip pooling when employers pay tipped employees at least the full federal minimum wage and do not claim a tip credit.
Employers who pay at least the full federal minimum wage are no longer prohibited from allowing employees who are not customarily and regularly tipped—such as cooks and dishwashers—to participate in tip pools.

However, managers and supervisors are still prohibited from participating in tip pools. However, employers should remember that some states have different rules concerning tip pools and tip credits. When there are differences between state and federal laws in this area, the law more favorable to the employee generally applies. Florida follows the federal tip pooling rules.

Read the new Fact Sheet #15: Tipped Employees Under the Fair Labor Standards Act (FLSA).

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