As of April 30, 2021, the US Department of Labor will enforce new rules regarding tip pooling. The significant changes include:
- Both “front of the house” and “back of the house” employees may participate in the tip pool, so long as the employer does not take a tip credit (i.e. the employer must pay the tipped employees at least minimum wage and cannot pay a lower “tipped” wage). Previously, only “front of the house” employees (typically servers and bartenders) could participate.
- Managers and supervisors may not participate in a tip pool (regardless of whether the employer takes a tip credit). This is part of a larger prohibition on employers keeping any portion of employees’ tips.
- There are new recordkeeping requirements for employers who maintain a mandatory tip pool but do not take a tip credit.
- The DOL has proposed eliminating the 80/20 calculation of how a tipped employee spends their time. Under the existing rule, an employer may only take a tip credit if a tipped employee spends less than 20% of their work time on non-tipped duties, such as rolling silverware, setting/clearing tables, cleaning dishes, etc. However, the DOL has delayed the elimination of this rule until late 2021 for further review and comment.
If your business uses a tip pool, please contact the attorneys at Demorest Law Firm for assistance in complying with the new (and existing) DOL regulations, as well as Michigan’s minimum wage requirements.
