Department of Labor Proposes Changes to Tip Pool Rules

The Department of Labor (DOL) has just announced that it is going to revisits tip pools. Currently, tip pools are highly regulated with the requirement that only those workers who typically earn tips are able to participate in the pool. This typically excludes managers, but also hourly cooks and dishwashers – “back of the house” staff. While proponents assert that the move is intended to narrow the disparity between waitstaff that may earn significantly more than other restaurant workers, critics believe the newly created regulations go too far. The proposed rule would allow employers to control all tips, thus legalizing “wage theft.” Employers could take tips that are currently rightfully owned by the staff and decide what to do with the tips. The money could all go to management rather than the workers. One observer noted, “allowing employers to distribute tips as they see fit, would end the Labor Department’s practice of treating gratuities as the property of workers, a custom that dates to the 1974 amendments to the Fair Labor Standards Act.”

Under current regulations, which were imposed by the Obama administration in 2011 (and would be rescinded under the new proposal), tips are prohibited from being distributed to anyone other than front-of-house staff. Employers are also restricted from use of those tips.

No changes have been made thus far. The DOL is accepting public comment until January 4 here.

For more information or if you have any wage and hour question, please contact the experienced Georgia wage and hour lawyers at Buckley Bala Wilson Mew LLP for an immediate case evaluation.