Finally a decision on tip pooling!

Restaurants have the direction we need to move forward in sharing tips with the heart-of-the-house (HOH) employees (kitchen, bussers and dishwashers) – under certain circumstances.

For restaurants this clarification has been long awaited. In the last few years, there have been many lawsuits and differing judgements making it difficult for restaurants to know what was legal and what was not.

The most important of those “certain circumstances” is that all employees must be paid a full, local minimum wage in order to have the ability to pool tips broadly with HOH.

Here is what the DOL had to say about the inclusion of this law in the omnibus bill:

Tip Pooling:

The omnibus appropriations bill includes a bipartisan statutory provision to ensure that workers in the back of the house (i.e., cooks, bussers, dishwashers) can participate in tip pools in appropriate circumstances. Importantly, this same provision makes clear that employers themselves cannot keep tips.

As our position has always stated, supervisors, managers and owners are not allowed to benefit from a tip pool.

NMRA has maintained that the heart-of-the-house employees should participate in tip pools as long as the restaurant is not taking a tip credit. The tip credit allows for employers to pay a lower wage to employees who customarily and regularly make tips. The tips plus wage must always equal or be greater than the minimum wage. Therefore, if you are a restaurant that pays servers less than minimum, you cannot pool tips with heart-of-the-house employees.

We still caution you to get clarification from legal council before implementing any change because the enforcement and penalties from unintentional violations is stiff.

According to the NY Times. “The provision would give the secretary of labor broader authority to impose civil penalties on employers who steal tips. For example, workers currently must show that the theft was repeated or willful. Now, civil penalties could be applied to any instance of tip theft.”

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TIP-POOLING Update 10/1/21:

Labor Department Issues Final Rule on Tips Civil Monetary Penalties

The Department of Labor (DOL) last Thursday issued a final rule on Civil Monetary Penalties (CMPs), restoring the department’s ability to assess CMPs of up to $1,100 per violation against employers who take tips earned by their employees, regardless of whether those violations are repeated or willful. In addition, the revision further provides guidance on circumstances where employers’ conduct may be willful.

In a win for the Association, the final rule also provides clarification on the 2020 Tip final rule addressing managers and supervisors. It states that while managers or supervisors may not receive tips from mandatory tip pools, managers and supervisors are not prohibited from contributing tips to eligible employees in such pools.

The final rule takes effect Nov. 23, 2021, and the Wage and Hour Division of DOL will assess CMPs for employer violations as deemed appropriate.

TIP-POOLING UPDATE from NRA 4/10/18: As you know, our industry achieved a significant victory in the recently passed “omnibus” spending bill that fully repealed a 2011 regulation that attempted to prohibit back-of-the-house staff from participating in tip pools in restaurants where employers did not take a tip credit. However, we needed further clarification over a provision that bars some “managers” and “supervisors” from participating in a tip-pool.

We are pleased that the Department of Labor (DOL) is moving forward with the process to roll-back the Obama-era rule with its recent release of a Field Assistance Bulletin (FAB), which provides our industry with much needed clarity. The FAB instructs employers to use the “duties test” to determine who qualifies as a supervisor or manager, and establish tip-pool eligibility. Essentially, if an employee earns most of their pay through tips, but also has a limited supervisory role, they are still allowed to participate in a tip-pool.

We will continue to offer advice to the DOL as it works to finalize tip-pooling regulations and procedures.

For questions, contact Angelo Amador, Senior Vice President of Legal Advocacy, and Shannon Meade, Director of Labor and Workforce Policy.

Related articles: FastCasual – Changes to Tipping Laws Could Lead to Big Fines for Violating Brands