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DOL to rescind 2011 Tip Pooling Rule
The Department of Labor issued a notice of proposed rulemaking (NPRM) last week detailing plans to rescind tip regulations issued by the Obama administration. At issue in the NPRM is tip regulation language that bars certain tip-sharing arrangements in establishments where an employer meets minimum wage requirements and does not take a tip credit against its minimum wage obligations. The Obama-era rule limits tipped employees from sharing tips with non-tipped coworkers, even where they receive at least minimum wage and the employer does not take a tip credit.
The NPRM explains that rescission of this language will allow employers to develop agreements with employees to share tips with back-of-the-house employees and others who are not customarily and regularly tipped. Under the revised rule, the disposition of tips in situations where an employer pays at least minimum wage and does not claim a tip credit would be governed by state law or, in the absence of such, whatever agreement is reached between an employer and its employees. The proposed revisions would not impact limitations placed on tip pooling arrangements for those employers who take a tip credit against their minimum wage obligations. In such cases, tipped employees will continue to be prohibited from sharing tips with back-of-the-house workers.