Tipped Employee Rules in the News
By: David Lunzmann, SHRM-CP, PHR
On March 23, 2018, with national attention focused on the new spending bill, the President and Congress also quietly passed legislation making employer retention of tips illegal under the Fair Labor Standards Act (FLSA).
Key early guidance:
- Make sure employers, managers and supervisors do not keep any portion of tips received by employees for any purpose, regardless of whether the employer takes a tip credit.
- Recognize that any tip sharing (Tip Pools) among both tipped and non-tipped employees (cooks in the kitchen for instance) where no tip credit is taken is now acceptable.
- Recognize also that employers are prohibited from forcing tipped employees to share tips with non-tipped employees.
Employers with tipped employees should take this opportunity to review their tip pooling and tip distribution practices to ensure they are not retaining any employee tips. Employers who unlawfully keep employees’ tips could now be subject to a newly enacted civil monetary penalty, in addition to FLSA penalty provisions.