DOL Issues Final Rule On Regulations Covering Tipped Employees

Summary

The U.S. Department of Labor announced a Final Rule on December 22, 2020, that clarifies tip pooling for employees in the food service and hospitality industry, as well as how the tip credit applies to employees who perform both tipped and non-tipped duties.

The Upshot

The Final Rule:

• allows employers to create "nontraditional" tip pools including employees who do not regularly receive tips, as long as those employees receive minimum wage;
• explains that employers may collect tips to operate a tip pool, but may not keep tips received by employees;
• requires recordkeeping for those employers who do not take a tip credit but who facilitate a mandatory tip pool;