In an article for Full Service Restaurant Magazine published on April 9, 2018, Alicia Koepke provides insight on two recent updates to the Fair Labor Standards Act (FLSA) regarding employee tip income. Many restaurants know that the FLSA requires them to pay minimum wage to non-exempt employees, but allows employers under certain circumstances to credit tips toward a portion of the minimum wage obligation. However, there has been significant uncertainty and litigation about what employers can do with employees’ tips when they do not take this tip credit, and a March 23 FLSA amendment made clear that employers, managers and supervisors cannot keep any portion of employees’ tips.
While the amendment does not define “managers” or “supervisors,” the Department of Labor released a Field Assistance Bulletin on April 6 giving more clarification on the duties of a manager or supervisor, such as having the primary duty of managing the enterprise or regularly directing the work of two or more employees.
The second update to the FLSA allows employers who do not take tip credit, to pool or share employees’ tips among other workers who do not normally receive tips, but only if those employees are not managers or supervisors. The FLSA amendment did not explicitly say that when no tip credit is taken, employers may now require tip pooling or sharing with non-customarily tipped employees who are not managers or supervisors, but the DOL’s Field Assistance Bulletin settled that “employers who pay the full FLSA minimum wage are no longer prohibited from allowing [non-supervisory] employees who are not customarily and regularly tipped – such as cooks and dishwashers – to participate in tip pools.”
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