New Rules For Distributing Tips In The Tip Pool

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A new law enacted in 2018 changed the way employers, including concessioners, can use tip pools.  The Department of Labor (DOL) has just issued proposed rules to implement these changes.

The new law prohibits employers keeping or giving to their managers or supervisors any money from tip pools.  The law also eliminated prior restrictions that had been imposed on the use of tip pools.  As a result, DOL’s proposed regulations would allow employers who directly pay all their employees the federal minimum wage (i.e., those who do not use the tip credit) to require a tip pool and share the tips that go into the pool with “back of the house” employees such as kitchen workers and others who traditionally have not been tipped.  DOL’s current rules are to the contrary, stating that “a valid tip pool may not include employees who do not customarily and regularly receive tips, such as dishwashers, cooks, chefs and janitors.”

If the employer does not directly pay its employees the federal minimum wage but instead uses tips to meet the minimum level of pay (i.e., those who use the tip credit), the rules have not changed and it can only require that tips from a tip pool be shared with those who have traditionally shared in tip pools, including busboys and hostesses.

Comments on DOL’s proposed regulations are due by December 9, 2019.

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