The Department of Labor has been considering new policies regarding tipped employees for some time now. Under the new administration, recently they put a pause on enacting these rules. In their latest policy, they are putting a pause on parts of the law while allowing other parts to go into force.

The portion on the final rule that WILL go into effect will allow employers to expand the distribution of tip pools to additional jobs that are traditionally non-tipped. Under this new rule, these traditionally non-tipped employees may participate in the tip pools if the employer DOES NOT TAKE THE TIP CREDIT for any positions that participate in the tip pool. As of April 30th, employers who do not take the tip credit (who pay their employees at least the full minimum wage) may include traditionally non-tipped workers in the tip pool. This would include cooks, busboys, custodians and other similar roles. If they do include these roles in the tip pool, they must be certain to maintain accurate records.

Regardless of whether or not additional employees are included in the tip pools, employers are still forbidden to distribute any tips or any portion of the tip pool to management roles.

The portion of the proposed rule that is currently on pause includes penalties for violating the rule and whether or not employers can take the tip credit for employees who perform both tipped and non-tipped duties. We should be getting further guidance on these topics this summer.

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