USDOL Issues Proposed Rule for Tip Regulations Under FLSA

The United States Department of Labor (USDOL) announced a proposed rule for tip provisions of the Fair Labor Standards Act (FLSA) implementing provisions of the Consolidated Appropriations Act of 2018 (CAA).

Some of the proposed revisions would:

  • Prohibit employers from keeping employees’ tips and prohibit managers and supervisors from keeping any portion of these tips, including from a tip pool.
  • Clarify that an employer may exert control over an employee’s tips only by
    • Distributing tips to those who received them
    • Instituting mandatory tip pools in compliance with FLSA regulations
    • Facilitating a tip pool
  • Remove the restrictions on use of tips by employers that do not take an FLSA tip credit toward its minimum wage obligation for tipped employees, which would allow employers to include a broader group of workers that do not traditionally receive tips, such as cooks or dishwashers, in a mandatory tip pool.
  • Allow the employer to take a tip credit for any amount of time a tipped employee performs related, non-tipped duties with tipped duties.

Comments on the proposed rule, which was published on October 8, will be accepted through December 9, 2019. For more information, see the Fact Sheet.