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Trump Administration Ruling Would Let Restaurants Pool Tips

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A 2011 measure barred employers from collecting and sharing out tip income
Tip
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Tip pooling can be used as an argument by employers to pay a lower hourly wage to kitchen staff.

The Department of Labor may soon eliminate an Obama-era restriction on mandatory tip pooling among restaurant staff, opening the door for employers to redistribute tips from service staff to their colleagues behind the scenes.

In 2011, the U.S. Department of Labor added language to the Fair Labor Standards Act, or FLSA — which establishes minimum wage, overtime pay, recordkeeping, and youth employment standards in both government and the private sector — to ban restaurant and bar tip pooling between front-of-house workers (servers, bartenders, etc.) and non-tipped back-of-house employees (such as chefs and dishwashers).

Depending on the state, tipped employees may be paid as little as $2.13 an hour, the idea being that the balance of the applicable minimum wage is made up with tips. Untipped back-of-house staff, on the other hand, must be paid at least the regular minimum wage.

The Department of Labor instituted the 2011 rule out of concern that tip pooling would be used as an argument by employers to pay the lower minimum to all employees.

The National Restaurant Association opposed the FLSA measure, petitioning the Supreme Court to hear a case that would address the issue. The case has not yet reached the court's docket, but today, the Trump administration's Office of Management and Budget, in announcing a series of regulatory changes planned for later this year, proposed rescinding the 2011 policy.

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No action has yet been taken, and the new regulations wouldn't take effect until fall.