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Department of Labor Proposes Rescinding Obama Era Tip Pool Rule


Yesterday, the Department of Labor announced a proposed rule that would rescind an Obama era tip pool rule that prevented employers from redistributing servers' tips to back of the house employees.  

Federal law has long held that employers cannot force employees to divide their tips with other employees if the tipped employees do not receive a base pay of at least the federal minimum wage.  The tip pool rule, in place since 2011, expanded this protection to all tipped workers and prevented employers from dividing tips and giving a cut to kitchen staff and others that do not directly receive tips.  Under the rule as enacted during President Barack Obama's administration, the tips were declared the property of the workers that collected them regardless of the base pay rate of the employee.

Under the proposal from the Department of Labor announced yesterday, this rescission of tip pool rule would apply only to employees already making at least the federal minimum wage, $7.25/hour, and not to "tip credit" employees whose base pay is below the federal minimum wage.  (In essence, it would put things back in place as they were before the Obama era tip pool rule came into effect in 2011).  

In its press release, the Department of Labor championed this proposal as an effort to decrease wage disparity between tipped and non-tipped workers (something I am inclined to agree with.)  However, critics have been quick to argue that all tips belong to the workers that earned them and any attempts to redistribute tips to back of the house employees would be "straight up stealing".  Assuming this proposal goes into effect, I would expect some group to make a legal challenge and fight the effort in court.  Stay tuned.



For a copy of the Department of Labor press release:  https://www.dol.gov/newsroom/releases/whd/whd20171204

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