The Department of Labor (DOL) has announced an intent to rescind the notorious 2011 Federal Tip-Pooling Rule, which currently prevents service-industry employers from allowing front-of-house servers to share tips with back-of-house employees (i.e., cooks and dishwashers). Under the 2011 regulation, tip-pools must only include front of house staff. Given the prevalence of tip-pooling in the service industry, the 2011 rule has been the subject of numerous legal challenges, including two petitions that are currently pending before the United States Supreme Court.

As a result of these legal challenges, the White House Office of Management and Budget issued its regulatory agenda in late July, indicating an intent to rescind the 2011 tip-pooling rule.

What does this mean for you? If the law is revoked, employers who do not utilize a “tip-credit” to meet minimum wage requirements will be permitted to distribute tips amongst both front-and-back of house employees under federal law. Importantly, however, this change will not impact more stringent state laws on this topic. If you have a question about how tip-pooling works in your state, Stokes Wagner is happy to advise.

For more legal updates, check out our update for September 2017!

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