On Aril 6, 2018, the U.S. Department of Labor announced amendments to the Fair Labor Standards Act (“FLSA”) § 3(m).

One amendment rescinds portions of regulations regarding tip pooling when tipped employees earn at least the full FLSA minimum wage and do not claim a tip credit. In light of this amendment, the Department of Labor provided guidance and announced that employers who pay the full FLSA minimum wage are no longer prohibited from allowing employees who are not customarily and regularly tipped—such as cooks and dishwashers—to participate in tip pools.

Another amendment prohibits employers from keeping tips received by their employees, regardless of whether the employer takes a tip credit. This means that managers and supervisors are still prohibited from participating in tip pools as their participation would deemed as though the employer is unlawfully keeping the tips, which is still prohibited under the FLSA.

What does this mean for you? The FLSA effectively allows back-of-house staff who earn at least minimum wage and are employed in states without mandated tip credits (California, Nevada, Washington, Alaska, Minnesota, Montana) to participate in tip pools. The Dept. of Labor’s Wage & Hour Division expects to proceed with finalized rulemaking in the near future to fully address the impact of these 2018 amendments.

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