Current Tips Regulations

The Department’s Tips regulations are available in the Code of Federal Regulations (CFR) at Title 29 Part 531, Subpart D - Tipped Employees (§ 531.50 et seq.).

The FLSA allows employers who meet certain criteria to take a partial credit against their minimum wage obligations for tipped employees—those engaged in an occupation in which they customarily and regularly receive tips.  Shortly after Congress created this “tip credit” in 1966, the Department promulgated its Dual Jobs regulation at 29 C.F.R. 531.56(e) recognizing that an employee may be employed both in a tipped occupation and in a non-tipped occupation, and that an employer may take a tip credit against its minimum wage obligations only for the time the employee works in the tipped occupation.

On October 29, 2021, the Department issued its 2021 Dual Jobs Final Rule, which went into effect on December 28, 2021, updating the original Dual Jobs regulation.  On October 29,  2024, a federal court vacated portions of the Department’s 2021 Dual Jobs Final Rule, with the effect of reinstating the Department’s original dual jobs regulation. The operative version of 29 C.F.R. 531.56(e) is thus the original Dual Jobs regulation that was in place on December 27, 2021, prior to the 2021 Dual Jobs Final Rule, and is available here.

Regulatory History 2020-2024

In 2020 and 2021, the Department completed a series of rulemakings to update its regulations to protect tipped workers. These rulemakings addressed 2018 legislative amendments to section 3(m) and other sections of the Fair Labor Standards Act (FLSA) to expressly prohibit employers, including managers and supervisors, from keeping employees’ tips. The rulemakings also updated the Department’s “dual jobs” regulations addressing the circumstances under which an employer can take a partial credit against its minimum wage obligations based on the tips received by employees.

The current regulations were adopted through the following three rulemakings:

1. The Department published a final rule, “Tip Regulations Under the Fair Labor Standards Act (FLSA)” (2020 Tip final rule), on December 30, 2020, (See 85 FR 86756). The parts of this rule which became effective on April 30, 2021 provide:

  • an employer cannot keep employees’ tips under any circumstances; managers and supervisors also may not keep tips received by employees, including through tip pools;
  • an employer that pays the full minimum wage and takes no tip credit may allow employees who are not tipped employees (for example, cooks and dishwashers) to participate in the tip pool;
  • an employer that collects tips to facilitate a mandatory tip pool generally must fully redistribute the tips within the pay period; and,
  • employers that do not take a tip credit, but collect employees’ tips to operate a mandatory tip pool, must maintain and preserve payroll or other records containing information on each employee who receive tips and the weekly or monthly amount reported by the employee, to the employer, of tips received.

2. The Department issued a final rule on September 24, 2021 (see 86 FR 52973) (Civil Money Penalty (CMP) final rule), which withdrew and modified two portions of the 2020 Tip final rule related to the assessment of CMPs; the CMP final rule also modified provisions of the 2020 Tip final rule addressing managers and supervisors. Under the CMP final rule, which became effective on November 23, 2021, the Department:

  • restored its ability to assess CMPs against employers who violate the FLSA by taking tips earned by their employees, regardless of whether those violations are repeated or willful;
  • adopted the same rules, procedures, and amount considerations for CMPs for keeping tips as it applies to other FLSA CMPs;
  • addressed when minimum wage or overtime violations of the FLSA are considered “willful” and thus subject to a CMP assessment;
  • clarified that while managers or supervisors may not receive tips from tip pools, managers and supervisors are not prohibited from contributing to mandatory tip pools; and,
  • clarified that managers and supervisors may only keep tips that they receive from customers directly for services that the manager or supervisor directly and “solely” provides.

3. On October 29, 2021, the Department issued the Dual Jobs final rule, which withdrew and modified the dual jobs portion of the 2020 Tip final rule and took effect on December 28, 2021. (See 86 FR 60114). The 2021 Dual Jobs final rule addressed the circumstances under which an employer can take a partial credit against its minimum wage obligations based on the tips received by employees.

On October 29, 2024, the United States Court of Appeals for the Fifth Circuit issued a decision in Restaurant Law Center v. U.S. Department of Labor, 115 F.4th 396 (5th Cir. 2024), superseded on reh’g (5th Cir. Oct. 29, 2024), vacating portions of the Department’s 2021 Dual Jobs Final Rule, with the effect of reinstating the Department’s original Dual Jobs regulation.

The operative version of 29 C.F.R. 531.56(e) is thus the original Dual Jobs regulation that was in place on December 27, 2021, prior to the 2021 Dual Jobs Final Rule. That regulation provides:

In some situations an employee is employed in a dual job, as for example, where a maintenance man in a hotel also serves as a waiter. In such a situation the employee, if he customarily and regularly receives at least $30 a month in tips for his work as a waiter, is a tipped employee only with respect to his employment as a waiter. He is employed in two occupations, and no tip credit can be taken for his hours of employment in his occupation of maintenance man.

Such a situation is distinguishable from that of a waitress who spends part of her time cleaning and setting tables, toasting bread, making coffee and occasionally washing dishes or glasses. It is likewise distinguishable from the counterman who also prepares his own short orders or who, as part of a group of countermen, takes a turn as a short order cook for the group. Such related duties in an occupation that is a tipped occupation need not by themselves be directed toward producing tips.

The Department will continue to update informational materials in light of the Fifth Circuit’s decision.

Additional Procedural Background

The Department published its 2020 Tip final rule on December 30, 2020, which was scheduled to go into effect on March 1, 2021. The 2020 Tip final rule, among other changes, addressed the 2018 legislative amendments to the FLSA and revised the Department’s dual jobs regulation. (See 85 FR 86756).

However, the Department delayed the effective date of the portions of the 2020 Tip final rule addressing 1) CMPs for keeping tips and 2) dual jobs, plus 3) another portion addressing when other FLSA violations are willful, in order to reconsider issues of law and policy raised by these portions of the rule. (See 86 FR 22597). The other provisions of the 2020 Tip final rule—those provisions addressing the 2018 legislative changes to tips and tip pooling in section 3(m) and related recordkeeping requirements—went into effect on April 30, 2021.

As noted above, the CMP final rule, issued on September 24, 2021, withdrew and modified the two portions of the 2020 Tip final rule related to the assessment of CMPs. It also modified regulatory provisions addressing managers and supervisors. (See 86 FR 52973). The Dual jobs final rule, published on October 29, 2021, withdrew and modified the dual jobs portion of the 2020 Tip final rule. (See 86 FR 60114). On October 29, 2024, a federal court vacated portions of the Department’s 2021 Dual Jobs Final Rule, with the effect of reinstating the Department’s original Dual Jobs regulation. The operative version of 29 C.F.R. 531.56(e) is thus the original Dual Jobs regulation that was in place on December 27, 2021, prior to the 2021 Dual Jobs Final Rule, and is available here.