The U.S. Department of Labor Wage and Hour Division issued a Field Assistance Bulletin explaining the enforcement of tip credit rules under the Fair Labor Standards Act. The FAB addresses (a) employers keeping employees’ tips and (b) tip pooling.
Employers are prohibited from taking employees’ tips in all circumstances. The FAB confirms that the agency will take action to recover tips unlawfully taken by employers and assert penalties on employers who keep tips.
Prior to the FAB, tip pooling (sharing of tips between front-of-the-house and back-of-the-house staff) was not allowed when employers paid tipped employees at least the full federal minimum wage. The new rule gives employers the right to allow non-tipped workers receiving full federal minimum wage (such as cooks and dishwashers) to participate in tip pools.
Employers in businesses where employees receive tips should review the new guidance to make sure they are compliant. A copy of the guidance may be accessed by clicking here.