Update August 2023:
Although the U.S Department of Labor (USDOL) issued a rule on September 24, 2021 clarifying that managers and supervisors may only keep tips that they receive from customers directly for services that the manager or supervisor directly and “solely” provides, due to increased scrutiny and enforcement by the USDOL, ORLA does not recommend managers and supervisors keep any tips received during service if the establishment has a tip pool system in place.

Because managers and supervisors may set working hours, areas of service, days on or off or other functions related to an employee’s ability to earn tips, to avoid potential lawsuits, fines, penalties or other consequences, ORLA does not recommend managers and supervisors keep any tips received during service if the establishment has a tip pool system in place.

ORLA in the News with U.S. Department of Labor Final Rule on Tip Pooling
A final rule on tip pooling in the United States was recently released on December 22, 2020 and will go into effect across the country on February 20, 2021. The final rule further establishes the legality of overseeing and managing a tip pool that includes staff who do not customarily and regularly receive tips by directly interfacing with a customer. Managers and supervisors are still prohibited from participating in tip pools. The final rule does define further, explaining as follows:
 
“...the final rule defines a manager or supervisor for purposes of section 3(m)(2)(B) as any employee (1) whose primary duty is managing the enterprise or a customarily recognized department or subdivision of the enterprise; (2) who customarily and regularly directs the work of at least two or more other full-time employees or their equivalent; and (3) who has the authority to hire or fire other employees, or whose suggestions and recommendations as to the hiring or firing are given particular weight. The definition also includes as managers or supervisors any individuals who own at least a bona fide 20 percent equity interest in the enterprise in which they are employed and who are actively engaged in its management.”
 
In summary, the final rule simply codifies our collective win advocating for the importance of tip pools. Pages 11 and 12 of the Rule states:
 
“In 2016, a divided Ninth Circuit panel upheld the validity of the 2011 regulations. See Oregon Rest. & Lodging Ass’n (ORLA) v. Perez, 816 F.3d 1080, 1090 (9th Cir. 2016). Although the Ninth Circuit declined en banc review of the decision, ten judges dissented on the ground that the FLSA authorized the Department to address tip pooling and tip retention only when an employer takes a tip credit. The dissent noted that the Ninth Circuit itself had decided in Cumbie that the FLSA ‘clearly and unambiguously permits employers who forgo a tip credit to arrange their tip-pooling affairs however they see fit.’ … In its 2018 response to the petition for a writ of certiorari in the ORLA case, the government explained that the Department had reconsidered its defense of the 2011 regulations in light of the Ninth Circuit’s ten-judge dissent from denial of rehearing in ORLA and the Tenth Circuit’s decision in Marlow … the Department published in December 2017 an NPRM that proposed to rescind the challenged portions of the regulations.”
 
The actual regulation and a summary of the final rule can be found here: https://www.dol.gov/agencies/whd/flsa/tips.

Restaurant Employee Compensation Tools
With tip pooling being legal with back of the house employees, employers may have questions about what their options are. ORLA launched a Restaurant Compensation Solutions Workgroup to review tools being implemented in restaurant operations across the state, including mandatory service charges, tip pooling policies based on sales that assist in compensating kitchen staff, and dual tip lines notating tip options for both servers and kitchen staff. 

Tip pooling policies should be carefully reviewed with counsel before implementation to ensure compliance with all applicable requirements. For more on this subject, click the links below.

• Access the Tip Pooling/Compensation Solutions (ORLA members only; login required)
• Watch on-demand Webinar: Tip Pools and Surcharges (Restaurant Law Center, March 2023)
  
• Read more on Service Charge Guidance  (ORLA, 2019)

Update: December 2019
​A federal spending bill passed in 2018 abolished a 2011 regulation prohibiting tip pooling; managers can now require that servers share tips with kitchen staff in states where employers do not take a tip credit. This change allows tip sharing among both customarily and non-customarily tipped employees in Oregon, including dishwashers and cooks. Managers, supervisors, and owners cannot participate in the tip sharing. A proposed rule to implement the change has been released as of October 7, 2019; comments were due by December 9, 2019. 

One thing this proposed rule seeks to address is that the words “supervisor” and “manager” were not defined in the 2018 spending bill. This is especially important to our industry since many have hybrid approaches to their service positions. Supervisors and managers in some of Oregon’s smallest restaurant operations commonly serve guests and have participated in front-of-the-house tip pools as a part of a team approach to foodservice.

Prior to this change, the decision to participate in a tip pool was left to employees. For more context on the issue, check out Tipping the Scales (Oregon Business, April 2018). The Bureau of Labor and Industries (BOLI) FAQ may answer any additional questions regarding tips at Oregon.gov/BOLI.

Resources/News:

• Tip Regulations under the Fair Labor Standards Act (FLSA), U.S. DOL
• Tip Pooling With Back-Of-House Is IN (in Most States); Manager and Supervisor Tip-Sharing Is OUT, Davis Wright Tremaine, April 2018

For additional questions, contact Greg Astley, Director of Government Affairs, at 503.682.4422.

This is for general informational purposes only. The information is not, and should not be relied upon or regarded as, legal advice. Please consult with your legal advisors.

Guest Blog

The leisure and hospitality industry is one of the largest employer pools in the country, employing over 16 million people nationwide. While a lot of progress has been made in this industry to push the talents of those with disabilities, obstacles still exist. Unfortunately, one of the greatest barriers is employers’ assumptions that people with disabilities may not be able to perform certain tasks due to their conditions. This misconception deprives the industry of great talent while denying countless people the chance to pursue fulfilling work. Here are some tips to learn how you can create opportunities for people with disabilities as an employer.

Know Your Responsibilities as an Employer

The Americans with Disabilities Act (ADA) is crucial to promoting an inclusive and accessible workplace, making it unlawful for employers to discriminate against a qualified individual who has a disability. Ensure all aspects of employment are fully accessible, including recruitment, hiring, and training. As an employer, you must engage in an interactive discussion with your employees or applicants to identify and provide reasonable accommodations, making sure those with disabilities can fully participate in your workplace. Don’t assume a candidate cannot perform the requirements of the job due to their disability. By adhering to the ADA’s requirements, you can ensure compliance with state and federal regulations.

Ensure Accessibility Through the Hiring Process

Ensuring compliance with the ADA also requires that your hiring process is accessible to those with disabilities. Embracing online applications is a pivotal move in this direction. By giving your applicants the option to apply online, you’ll break down physical barriers for candidates. Online applications can be tailored to accommodate various accessibility needs, such as screen readers, magnification tools, and keyboard navigation for individuals with visual impairments or mobility limitations. Keep in mind that your online applicants will probably want a PDF filler instead of having to print, fill out, and scan paper documents. Make your job applications available as fillable PDFs that your applicants can fill out and sign online!

Encourage Professional Advancement

According to JobSkills.org, encouraging your employees with disabilities to pursue professional advancement is a win-win strategy that can unlock the full potential of your team. For example, if you run a large chain with an IT department, empowering your employees to pursue an education in technology can ensure a highly-skilled and diverse IT team. With your support and mentorship, your employees can take steps for an online computer science degree, acquiring skills and knowledge they will bring back to your business. Furthermore, offering such opportunities signals to all employees that the company values their growth and is dedicated to building a workforce that reflects the richness of diverse talents and perspectives. 

Align Roles with Individual Strengths

When you hire someone with a disability, try to align their roles with their unique strengths rather than focusing on the limitations of their disability. For example, individuals with great interpersonal skills may thrive in guest services, front desk positions, or concierge roles. In the realm of housekeeping, employees with physical disabilities can be valuable members of the housekeeping staff, contributing to the maintenance and cleanliness of your establishment. For food and beverage roles, identify specific positions that align with the individual’s abilities, such as hosting, taking orders, preparing food, or bussing tables. 

Be sure to prioritize accessibility across all roles by providing the tools and equipment your staff need to do their jobs effectively. For those with hearing or vision challenges, the right software will ensure these employees can complete work on the computer. By recognizing and leveraging the unique strengths of employees with disabilities, and making reasonable accommodations wherever possible, you can create a diverse work environment with a low barrier to entry.

As the leisure and hospitality industry evolves, so must our approach to creating opportunities for people with disabilities. By increasing accessibility through the hiring process, like making applications available online, encouraging the professional development of our staff, and matching employees with roles in which they will thrive, we can maximize the potential of our workforce while unleashing a range of diverse skills and perspectives. | Martin Block

By definition, a captive audience meeting is a mandatory meeting during working hours. Captive audience meetings are an important tool for employers to explain aspects and implications of unionization (and other issues) that might not be readily apparent to many workers. How these meetings are conducted will differ from workplace to workplace.

In 2009, the Oregon Legislature passed SB 519, prohibiting employers from taking adverse employment action against any employee who declines to attend a meeting or participate in communication concerning an employer's opinion about religious or political matters.

Employers should consider their options accordingly. The Council of State Restaurant Associations produced an issue brief that provides valuable considerations for employers. ORLA members can access this brief in the Resource Library by logging in to OregonRLA.org.

Not an ORLA member yet? Visit our Membership page or reach out the ORLA Regional Representative nearest you.

Payroll Tax Referral / Safety Summit / Charity Golf

Salem Payroll Tax Referral – Oregon Business & Industry (our state Chamber of Commerce) is leading an effort to refer a recent 5-4 payroll tax vote of the Salem City Council to the November ballot. This would tax anyone performing work within the Salem city limits at a rate of .814 percent. ORLA has been engaged in this effort through testimony and volunteer signature gathering for effected members within the Salem City limits. Thus far, over 4,000 signatures have been collected to get the payroll tax on the ballot for voter consideration with a goal of 6,000 by August 9 to allow room for collection errors. We haven’t seen a collection effort that has resulted in this many signatures so quickly and our friends at OBI deserve a lot of credit for their efforts. Engage in this effort by visiting letsalemvote.com.
 
Portland Hotel & Restaurant Safety Summit – Downtown Clean & Safe hosted a Portland Hotel and Restaurant Safety Summit at the Nines last week in partnership with ORLA. About 40-50 hospitality industry members were in attendance and armed with concerns and questions. Speakers represented the Portland Police Bureau, mayor’s office, DA’s office, and Multnomah County. Outcomes include the Portland Metro Chamber (formerly the Portland Business Alliance) and ORLA collaborating on drafting 5-6 specific “asks” from the business/hospitality industry that will be presented to city, county, and state leadership. Read more in our new Portland Advocacy Blog.

AAHOA Charity Golf Tournament – The Asian American Hotel Owners Association (AAHOA) is holding a Charity Golf Tournament coming up on August 14 at the Reserve Vineyard & Golf Club in Aloha. One of the four recipients of the funds raised is the Oregon Hospitality Foundation. If your are interested in supporting the charities and can participate on August 14 please visit the Player and Sponsor registration links.