12.28.2020

Sharing is benevolent: DOL expands the tip pool and simplifies the 80/20 rule

Summary: On Tuesday, December 22nd, 2020, the U.S. Department of Labor (DOL) announced its final rule to extend tip exchanges and limit the 80/20 rule. This long-awaited final rule codifies three main points: Employers are allowed to include (1) employees in the back of the house who normally do not receive tips (like cooks and dishwashers) as part of the framework. Tipping group, (2) prohibits management from withholding tips from employees or participating in tip-sharing arrangements, and (3) allows you to receive tip credit regardless of tip size. Work that does not tip over (such as cleaning tables or rolling cutlery) The employee carries out his / her duties as long as they are carried out at the same time as his / her tip tasks or within a reasonable time immediately before or after the tip is tipped.

Background: After Congress passed the Consolidated Allowances Act of 2018, which amended Section 3 (m) of the Fair Labor Standards Act (FLSA), employers waited for the DOL to issue a final rule on changes in the environment. Common Tips and Loan Applications for Tips (DOL proposed a new rule on October 7, 2019, but did not publish a final rule). According to the applicable regulations, employees are entitled to receive at least the federal minimum wage from their employers. However, the FLSA allows employers to apply for a "tip credit" to meet this direct minimum wage amount by counting a limited number of tips from their employees' tips. These "knowledgeable employees" are the ones who routinely receive more than $ 30 per month in tips. However, if the employee with tips does more than 20% of the shift, such as cleaning and preparatory work, that has not been tipped, he is entitled to full direct payment of the federal minimum wage without deduction of the shift. Tip.

Under current federal law, smart workers must keep all of their tips unless they are distributed through a valid tip pool. Those allowed to share tips are limited to employees who receive a tip, regardless of whether or not their employer uses the tip as part of their compensation. Currently, a tipping group cannot include employers "for any reason", "including allowing managers or supervisors to withhold part of employee tips".

The new rule: The last rule extends the tip pool for employers who do not receive tips. Employees in the back of the house who traditionally do not receive direct tips can participate and receive part of the tip pool. DOL stated on the back of the house: "Employees [also] contribute to the overall customer experience, but may receive less compensation than their traditional employees." DOL hopes the change "will help narrow the pay gap between traditional and unsophisticated workers," an issue many employers grapple with when trying to fill positions in the back of the world. House.

The final rule also changes the DOL Tipping Ordinance to coincide with the 2018 amendment to Section 3 (m) of the FLSA, which prohibits employers from keeping tips received from their employees, regardless of whether the employer is the employer who deserve. Tip or not.

The last rule also codifies the most recent DOL guidelines that employers can credit tips regardless of how long an employee with a tip works without a tip during the shift as long as the work is done. "At the same time" as the employee is tipping "or for a reasonable time immediately prior to or after the tipping requirement is met."

Employer's conclusion : Employers who do not accept tips can make in-home positions more attractive by enabling these employees to generate additional income by tipping. However, employers should consider the laws of the states in which they do business and see if they have similar or stricter rules than federal proposal 80/20 and the tipping rule. The final DOL rule does not come into force until 60 days after its publication in the federal register (around February 20, 2021). In addition, there is a good chance that the Biden government will attempt to reverse the implementation of these new rules and begin drafting its own amendments. For now, employers should run business as usual and keep an eye out for updates in the coming months.

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