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ARTICLE · 01 AUGUST 2017

USDOL To Propose Modified Tip-Pooling Regulation

Readers will recall our prior posts regarding the U.S. Department of Labor's regulatory position adopted in 2011 saying that an employer may not retain any of an employee's tips even if it...

United StatesEmployment and HR

Readers will recall our prior posts regarding the U.S. Department of Labor's regulatory position adopted in 2011 saying that an employer may not retain any of an employee's tips even if it:

  • Takes no tip-credit under the federal Fair Labor Standards Act's Section 3(m), and
  • Instead pays the employee not less than the full FLSA minimum wage in direct wages (plus any FLSA overtime compensation due).

The relevant part of USDOL's regulation says:

Tips are the property of the employee whether or not the employer has taken a tip credit . . . under the FLSA. The employer is prohibited from using an employee's tips, whether or not it has taken a tip credit, for any reason other than that which is statutorily permitted in [the FLSA]: As a credit against its minimum wage obligations to the employee, or in furtherance of a valid tip pool.

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