Late yesterday, various press reports signaled what could be the beginning of the end for 2011 Department of Labor guidance that had greatly expanded legal claims against restaurants.
The 2011 rule barred businesses (mainly restaurants) from including nontipped workers in their tip pools. That practice – if done involuntarily – then entitles the servers or waitstaff who have contributed those tips to the tip pool to minimum wage for their hours (not the tip-credit minimum wage.)
As of this morning, the DOL had not released its’ rule publicly, but according to a Law 360 report the description “suggests it would roll back the DOL’s 2011 rule amending its interpretation of the Fair Labor Standards Act to blog businesses from giving a portion of service employees’ tips to traditionally nontipped workers, such as kitchen staff.”
The attack on this 2011 guidance is also making its way through the courts. The U.S. Supreme Court is expected to decide soon whether to review a case out of the Ninth Circuit that upheld the tip pooling rule.
The timing of the DOL’s expected rollback is unclear, but it could have a significant impact on many cases pending in the court systems or being threatened now. At the current rate, a change could be expected in the first quarter of 2018.
For restaurants and other employers such as hotels that have tipped employees, this change ought to be closely followed. Until we see the scope of the proposed rule change, it is unclear what the full impact on existing cases will be but given past practices on situations like this, but it might just evaporate a whole host of lawsuits that have popped up.