Update from the Small Business Administration
On October 8, 2019, the Department of Labor released a proposed rule that implements changes to tip regulations under the Fair Labor Standards Act (FLSA) due to the Consolidated Appropriations Act of 2018 (CAA). The FLSA generally requires covered employers to pay employees at least the Federal minimum wage, which is currently $7.25 per hour. The FLSA allows an employer to count a limited amount of the tips it’s “tipped employees” receive as credit towards the minimum wage obligation, this is called a “tip credit.”
- The Act prohibits employers, managers, and supervisors from keeping tips received by employees; regardless of whether the employers take a tip credit or not.
- This proposed rule does not change the requirements for employers taking a tip credit, which allows these employers to implement a tip pool among those employees like the bartenders and servers who “customarily and regularly receive tips.”
- The proposed rule allows employers who pay the full minimum wage (and do not take a tip credit) to implement a mandatory “nontraditional” tip pool in which employees who do not customarily and regularly receive tips, such as cooks and dishwashers, may participate.
- The proposed rule eliminates the “80/20 rule,” which required the employers to pay tipped employees the minimum wage if the employee spends more than 20 percent of his or her time performing non-tipped duties. The proposed rule allows employers to take a tip credit for any amount of time that an employee in a tipped occupation performs non-tipped duties contemporaneously with his or her tipped duties, or for a reasonable time immediately before or after performing the tipped duties.
Written comments on the proposed rule are due by December 9, 2019.
- Read the Federal Register notice and submit your public comments here: https://www.regulations.gov/document?D=WHD-2019-0004-0001
