Tip Cup

Trump’s Omnibus Bill Passes with New Tipping Rules and Prevents Employers from Keeping Tips

As one of the most contentious and potentially confusing issues in the restaurant industry, tipping rules continue to be a moving target with the Department of Labor (DOL) and the restaurant industry.

On a recent conference call with National Restaurant Association staffers, Angelo Amador, Executive Director of the Restaurant Law Center and Shannon Meade, Director of Labor and Workforce Policy for the National Restaurant Association, discussed the Trump administration’s changes to tip pooling rules stemming from the recent 2,200-page omnibus bill passed by Congress:

  • The previous Obama administration’s tip pooling regulation (which stated that tips are the sole property of the tipped employee and tip pooling is not allowed) is now invalid. As of March 23, 2018, employers who pay all hourly employees above federal minimum wage can tip-pool.
  • Skimming tips is a ‘no-no’ and can be met with civil penalties. The Trump administration’s push to give employers the ability to collect servers’ tips and redistribute them as they see fit was met with defeat thanks to last minute efforts by Senator Patty Murray (D-Washington) and Labor Secretary R. Alexander Acosta, who created revised language to make clear that employers can’t keep any portion of the tips earned by workers. Tips can be distributed to back of the house workers on the condition that employers pay all their employees the regular minimum wage as dictated by their respective state(s).
  • NRA’s Angela Amador advised restaurant owners to consult local legal counsel for questions about how state wage laws come into play with the revised tip rules. “Some states have restrictions on tip pooling. Generally, the FLSA (Fair Labor Standards Act) says that if there is a conflict between state and federal wage laws, the federal law prevails. We encourage employers to reach out to local counsel for advice,” said Amador.

What are the next steps?  According to Amador and Meade, the DOL will be issuing a position paper very soon with the National Restaurant Association quickly following suit. The second step is for the DOL to create a field book for DOL field employees. Finally, there will be the typical comment period with final regulations coming in a year or two. Look to state restaurant associations to publish guidance on tip pooling as well.

Mize Restaurant Group professionals will address the latest updates on tip pooling regulations this August at the Mize Restaurant Group’s Restaurant Summits to be held in Kansas City, Lawrence and Topeka. Look for more information this summer. We will keep you updated as the tip pooling discussion continues to unfold.