No Swimming: The Tip Pool is Closed to Managers and Supervisors:

President Trump recently amended the federal wage and hour law, to prohibit managers and supervisors for participating in tip pooling arrangements under any circumstance, whether or not the employer takes a tip credit (i.e., employers pay less than full minimum wage and employees earn the difference in tips).  In other words, employers, including managers and supervisors, cannot require tipped employees, such as waiters, servers, bartenders, etc., to pay any portion of their tips over to the employer, manager or supervisors.  Employers who violate this new rule not only must pay back employees’ ill-gotten tips, but also must pay liquidated damages in an equal amount, essentially a 2x multiplier.

The new law does however enlarge the tip pool in one respect.  Employers who do not take a tip credit and pay full minimum wage can now require employees to share tips with their traditionally non-tipped, back-of-the-house employees like cooks and dishwashers.

These changes will likely disproportionately affect restaurant workers who are often victims of unlawful tip pool policies.

Douglas Lipsky

Douglas Lipsky is a co-founding partner of Lipsky Lowe LLP. He has extensive experience in all areas of employment law, including discrimination, sexual harassment, hostile work environment, retaliation, wrongful discharge, breach of contract, unpaid overtime, and unpaid tips. He also represents clients in complex wage and hour claims, including collective actions under the federal Fair Labor Standards Act and class actions under the laws of many different states. If you have questions about this article, contact Douglas today by clicking here.