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Labor Department Moves to Allow Restaurants to Share Tips Between Cooks and Servers

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It's a first step toward rescinding Obama-era tipping regulations

Tip-pooling Labor Department Alexey Rotanov/Shutterstock

Restaurant owners may soon have more ways to distribute tips among staff — and waitstaff may lose a portion of their tips to non-tipped employees like cooks — if a new proposal from the Trump administration’s Department of Labor comes to pass.

The Labor Department is expected to recommend an end to an Obama administration rule, first instituted in 2011, that prevents employers from pooling or sharing tips between employees who traditionally receive tips (servers, bartenders), and non-tipped employees (cooks, dishwashers), according to an announcement.

The 2011 rule deemed tips the sole property of the employee. Earlier interpretations of the law allowed employers to redistribute (or even retain) a portion of a server’s tips if the server was paid the full hourly wage (set nationally at $7.25 per hour), not the lower tipped-minimum ($2.13 per hour), wage.

In the years following the Obama-era rule, courts have argued for and against the practice of tip pooling. Earlier this year, the National Restaurant Association asked the Supreme Court to hear the issue; the Labor Department’s announcement this week may make that hearing unnecessary.

While the announcement, which came in the form of a Labor Department regulatory agenda filing dated July 20, does not immediately change the law, according to Lexology, it puts wheels into motion for the administration to make permanent changes. Further decisions are expected to come in August and September, according to the National Law Review. For now, states in the the 9th circuit (Alaska, Arizona, California, and Hawaii) may still not share tips (based on a ruling in that court in 2016), but restaurant owners in 14 other states — including Colorado, Kansas, Florida, Georgia, Virginia, and Maryland — may continue to decide how they want to distribute an employee’s tips barring any applicable local laws.

Tip-Pooling Restrictions Slated To Be Rescinded, Labor Department Announces [Lexology]
Department Of Labor To Rescind 2011 Tip Pooling Regulation [NLR]
The Supreme Court Might Get to Decide If Tip-Pooling Is Legal [E]

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