UPDATE June 27, 2018 - Employers are once again allowed to expand tip pools and share tips among a broader range of employees including back-of-the-house employees. Although the Supreme Court denied our certiorari petition in the National Restaurant Association et al v. U.S. Department of Labor et al case, the decision leaves in place a lower court ruling affirming the tip rule’s legality.
> Download ORLA's Tip Pooling info sheet
A federal spending bill passed March 23rd abolished a 2011 federal regulation that prohibited tip pooling in all circumstances with non-customarily tipped employees. Employers are once again allowed to expand tip pools and share the tips among a broader range of employees in states where employers don’t take a tip credit. This change now allows tip sharing among both customarily and non-customarily tipped employees, including dishwashers and cooks.
However, there is one area still of concern to our industry, the words “supervisor” and “manager” were not defined in this spending bill. A number of industry members 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.
The Department of Labor (DOL) is moving forward with the process to roll-back the Obama-era rule with its recent release of a Field Assistance Bulletin (FAB), which provides our industry with much needed clarity. The FAB instructs employers to use the “duties test” to determine who qualifies as a supervisor or manager, and establish tip pool eligibility. Essentially, if an employee earns most of their pay through tips, but also has a limited supervisory role, they are still allowed to participate in a tip pool.
Given the ambiguity from DOL, tip pooling policies should be carefully reviewed with counsel before implementation to insure compliance with all applicable requirements.
For additional questions, contact Greg Astley, Director of Government Affairs, at 503.682.4422.