The U.S. Department of Labor (the “DOL”) has released a Field Assistance Bulletin (the “FAB”) in order to provide guidance concerning the Wage and Hour Division’s (“WHD”) enforcement of tip credit rules under the Fair Labor Standards Act (“FLSA”), after Congress amended FLSA Section 3(m) in the Consolidated Appropriations Act, 2018. The FAB says the following.
The FLSA prohibits employers from keeping tips received by their employees, regardless whether the employer takes a tip credit under 29 U.S.C. § 203(m). The FLSA also provides that portions of WHD’s regulations codified at 29 C.F.R. §§ 531.52, 531.54, and 531.59 that barred tip pooling when employers pay tipped employees at least the full FLSA minimum wage and do not claim a tip credit will have no further force or effect (until any future action by the WHD Administrator). WHD expects to proceed with rulemaking in the near future to fully address the impact of the 2018 amendments.
In the meantime, given these developments, employers who pay the full FLSA minimum wage are no longer prohibited from allowing employees who are not customarily and regularly tipped—such as cooks and dishwashers—to participate in tip pools. The FLSA prohibits managers and supervisors from participating in tip pools, however, as the FLSA equates such participation with the employer’s keeping the tips. As an enforcement policy, WHD will use the duties test at 29 C.F.R. § 541.100(a)(2)-(4) to determine whether an employee is a manager or supervisor for purposes of section 3(m). The FLSA also provides enforcement authority in FLSA sections 16(b) and 16(c) to, among other things, recover all tips unlawfully kept by the employer, in addition to an equal amount in liquidated damages.