US Department of Labour proposes new tip-pooling rule

8th December 2017 (Last Updated January 9th, 2018 11:39)

The US Department of Labour has proposed a rule change regarding the tip regulations under the Fair Labour Standards Act (FLSA).

The US Department of Labour has proposed a rule change regarding the tip regulations under the Fair Labour Standards Act (FLSA).

The Notice of Proposed Rulemaking (NPRM) seeks to allow sharing of tips among tipped and non-tipped employees to help decrease wage disparities, especially in restaurants.

Currently, tips are the property of the employee who received them as per a rule that went into effect in 2011.

In line with this 2011 rule, several states have also changed their laws.

The proposed rule, which applies only where employers pay a full minimum wage and do not take a tip credit, allows tip-pooling with employees such as restaurant cooks and dishwashers who do not receive direct tips.

However, the proposal would not affect current rules under the FLSA.

The proposal comes amidst several litigations involving the tip pooling and tip retention practices of employers that pay a direct cash wage that is at least the federal minimum wage.

The NPRM has been published in the Federal Register and will be available for public comment for 30 days.