“Back of House” Tip Pooling Could Land California Employers in Hot Water

From: JD Supra

Stefanie Renaud | Hirschfeld Kraemer LLP

As mentioned in our blog post on the Department of Labor’s (“Department”) new opinion letters clarifying aspects of the Fair Labor Standards Act (“FLSA”), April has seen a lot of changes and clarifications to the FLSA. One topic that has been discussed at length is the practice of tip pooling – which is common in customer-service industries where employees receive tips, such as restaurants and carwashes. The practice of tip pooling requires employees who have the most customer interaction, and typically receive tips, to share a portion of those tips with employees who have less direct interaction with customers, but still contribute to providing the customer’s service.

2011 Regulations and 2017/2018 Response

In December 2017, the Department of Labor (“Department”) raised a public furor after it released a proposed rule to rescind 2011 regulations.  At their most basic, the 2011 regulations forbade employers from taking employee tips. Those regulations also prohibited employers from including back of the house employees – such as dishwashers, line cooks, and other kitchen staff – in tip pools, unless the employer paid at least the full minimum wage.

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