Wednesday, December 23, 2020
The U.S. Department of Labor (DOL) has issued its long-awaited
Final Rule addressing who may share tips under the Fair Labor Standards Act (FLSA) and the circumstances under which employers may use a tip credit.
The Final Rule will be effective 60 days after publication in the Federal Register.
Summary of Final Rule
e.g., servers in the restaurant industry) to pool tips with non-tipped workers (
e.g., cooks and dishwashers), so long as the employer does not take a “tip credit” (
i.e., paying tipped employees a direct wage below the minimum wage) and, instead, pays such workers a direct wage equal to or greater than the minimum wage. Many commenters have argued that permitting only servers to receive tips, which in many restaurants can be very lucrative, yet prohibiting the kitchen staff, who prepare the food, from receiving tips was unfair.