DOL Amends Tipped-Employee Rules

The Department of Labor (“DOL”) recently made the following three substantive changes to regulations concerning tipped employees, which will become effective on March 1, 2021: 

  1. Regardless of whether an employer takes a tip credit, Employers, managers, and supervisors are prohibited from receiving employees’ tips as part of any tip pooling arrangement.  Employers are also prohibited from allowing managers or supervisors to keep employees’ tips.  In addition, under new recordkeeping requirements, employers need to identify each employee for whom the employer takes a tip credit and they must maintain records regarding the weekly or monthly amount of tips received, as reported by the employee to the employer. 
  2. DOL regulations allow employees who do not customarily and regularly receive tips – such as cooks and dishwashers – to be included in mandatory tip pooling arraignments.   
  3. An employer may take a tip credit for time that an employee in a tipped occupation spends performing related, non-tipped duties contemporaneously with tipped duties, or for a reasonable time immediately before or after performing the tipped duties. 

In addition to these new regulations, employers should also be aware that states and localities may impose additional requirements affecting employer obligations towards tipped employees. 

Brendan F. Cassidy is an attorney at Praemia Law, PLLC.  This article is for general informational purposes only and should not be relied upon or regarded as legal advice. Please contact Brendan Cassidy at or 703-399-3603 concerning particular facts and circumstances.