DOL Proposes Changes to Tip Credit
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].
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.
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Jyme Mariani, Esq., is Managing Editor of Payroll Currently and Payroll Information Resources for the APA.