News & Resources


DOL Proposes Changes to Tip Credit

BY: Jyme Mariani, Esq. | 10/17/19

The U.S. Department of Labor (DOL) has announced a proposed rule to amend the tip credit under the Fair Labor Standards Act (FLSA) [84 F.R. 53956, 10-8-19]. The proposed rule would implement provisions of the Consolidated Appropriations Act, 2018 and codify existing Wage and Hour Division guidance into the FLSA [DOL, 19-1800-NAT, 10-7-19].

Proposed Changes

The proposed rule would:

  • Explicitly prohibit employers, managers, and supervisors from keeping tips received by employees.
  • Allow employers that do not take a tip credit to establish a tip pool to be shared between workers who receive tips and are paid the full minimum wage and employees who do not traditionally receive tips.
  • Not impact regulations providing that employers that take a tip credit may only have a tip pool among traditionally tipped employees.
  • Update 29 C.F.R. §531.56(e) on dual jobs to reflect changes the DOL made in a Field Assistance Bulletin issued in February.
  • Add a new civil penalty (up to $1,100, plus an equal amount in liquidated damages) that may be imposed when employers unlawfully keep tips.

Additional Resources

For more information, the DOL has a webpage on the proposed rule, a fact sheet, and FAQs.

To learn more about federal and state laws, regulations, and information to keep your company's payroll operations in compliance, check out Payroll Source Plus!


Jyme Mariani, Esq., is Managing Editor of Payroll Currently and Payroll Information Resources for the APA.