U.S. Department of Labor Issues Field Assistance Bulletin Regarding Tip Pools and New Authority to Prevent Tip Theft

WASHINGTON, DC – With the inclusion of key provisions related to America’s tipped workers included in the recently passed Consolidated Appropriations Act, the U.S. Department of Labor’s Wage and Hour Division (WHD) has issued a Field Assistance Bulletin (FAB) to address WHD’s enforcement of tip credit rules under the Fair Labor Standards Act (FLSA).

As a result of this legislation, workplaces may establish tip pooling arrangements between “front of the house” and “back of the house” staff, such as cooks and dishwashers. The bill vacated WHD’s 2011 regulations that barred tip pooling when employers pay tipped employees at least the full federal minimum wage.

Additionally, Congress gave the Department—for the first time—authority to prevent employers from taking employees’ tips in all circumstances. Congress enacted this bipartisan law in response to U.S. Secretary of Labor Alexander Acosta’s testimony last month before the House Appropriations Subcommittee on Labor, Health and Human Services, and Related Agencies that he would support a law barring employers from taking tips.

FAB 2018-3 confirms that employers who pay the full federal minimum wage may now allow non-traditionally tipped workers, such as cooks and dishwashers, to participate in tip pools. The FAB also confirms that WHD will immediately begin using its new enforcement tools to protect American workers’ tips—including by recovering all tips unlawfully kept by employers, and imposing liquidated damages and civil monetary penalties as appropriate.

For more information about the FLSA and other laws enforced by the Division, contact its toll-free helpline at 866-4US-WAGE (487-9243). Information is also available at http://www.dol.gov/whd; the site includes a search tool to learn whether you may be owed back wages collected by WHD.