DOL unveils final tip rule

The U.S. Department of Labor has announced a final rule that changes regulations for tipped employees.

The rule, expected to become effective on Nov. 23 this year, prohibits managers and supervisors from keeping any portion of an employee’s tips, regardless of whether the employer takes a tip credit. The new regulations clarify that managers and supervisors may only keep tips they receive directly from customers for services they directly provide on their own. 

The final rule also prohibits employers, managers, and supervisors from receiving tips from an employee tip pool.

But the final rule does allow employers who do not claim a tip credit (because they pay their employees the full minimum wage) to impose a tip pooling arrangement that includes employees in the establishment who are not working in an occupation that customarily receives tips.

The final rule restores the DOL’s ability to impose penalties of up to $1,100 per violation against employers who take tips earned by employees, regardless of whether the violations were repeated or willful.