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ARTICLE · 13 APRIL 2018

New Tip Pooling Guidelines For Employers

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The recent passage of the Consolidated Appropriations Act of 2018 ("H.R. 1625"), an 878-page omnibus spending bill, significantly changes the rules for tip pooling under the Fair Labor Standards Act (the "FLSA").

United StatesEmployment and HR
Keith A. Goodwin
Keith A. Goodwin
Greg Labate
Greg Labate
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The recent passage of the Consolidated Appropriations Act of 2018 ("H.R. 1625"), an 878-page omnibus spending bill, significantly changes the rules for tip pooling under the Fair Labor Standards Act (the "FLSA"). While the conditions for taking a tip credit toward federal minimum wage obligations remain essentially unchanged, H.R. 1625 appears to permit the inclusion of a larger group of employees in tip pools when a tip credit is not taken. At the same time, H.R. 1625 still prohibits an employer from keeping any portion of the tips received by its employees and expands the scope of remedies and penalties available for violations of the tip rules.

The Previous Tip Pooling Rule

Section 203(m) of the FLSA permits employers to satisfy their federal minimum wage obligations to tipped employees (those who work in occupations where they customarily and regularly receive more than $30.00 per month in tips) by counting a limited amount of the tips actually received by

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