As Expected, Labor Department Issues Formal Proposal To Rescind Restrictive “Tip Pool” Rule

The U.S. Department of Labor (DOL) has formally proposed revising its regulations interpreting the Fair Labor Standards Act (FLSA) to eliminate certain restrictions on employers’ use of tip pools. The proposal, which was first telegraphed as coming in the Trump Administration’s semi-annual regulatory/deregulatory agenda published in August, would reverse the interpretation contained in a 2011 regulation issued by the Obama Administration.

While the 2011 regulation stating that tips are the property of the employee whether or not the employer takes a tip credit did not generate much attention when adopted, it has since become the subject of significant litigation, and the federal courts are divided over whether the current rule is a proper interpretation of the FLSA. Earlier this year, the Trump Administration’s Labor Department quietly implemented a non-enforcement policy regarding the rule, while reaffirming its intent to rescind the rule.

Comments on the proposal are due by February 5, 2018.

Members of the Center for Workplace Compliance (CWC) can read more here.