News and Information

USDOL Issues Final Rule Revising Tipped Employee Regulations

The U.S. Department of Labor (USDOL) issued a Final Rule revising tipped employee regulations to address amendments made to the Fair Labor Standards Act (FLSA) by the Consolidated Appropriations Act of 2018 (CAA). This final rule implements a number of changes, including:

• Removes the prohibition against employers that do not take a tip credit from implementing mandatory tip pools that include employees who do not customarily receive tips
• Explicitly prohibits employers from keeping employees’ tips for any purpose
• States that an employer that collects tips to facilitate a mandatory tip pool must fully redistribute the tips no less often than when it pays wages
• Codifies recent guidance that an employer may take a tip credit for time an employee in a tipped occupation performs related non-tipped duties either at the same time as or for a reasonable time immediately before or after performing tipped duties
• The rule has been submitted to the Office of the Federal Register and is effective 60 days from publication. For more information, see the USDOL website.

UPDATE: In accordance with the White House memorandum of January 20, 2021 (“Regulatory Freeze Pending Review”), the USDOL has proposed to delay the rule’s effective date to April 30, 2021. See Federal Register 2021-02485.