{"id":541,"date":"2021-10-05T19:55:28","date_gmt":"2021-10-05T19:55:28","guid":{"rendered":"https:\/\/forework.com\/?p=541"},"modified":"2022-12-24T20:04:04","modified_gmt":"2022-12-24T20:04:04","slug":"us-dol-targets-managers-who-receive-tips-in-new-final-rule","status":"publish","type":"post","link":"https:\/\/forework.com\/us-dol-targets-managers-who-receive-tips-in-new-final-rule\/","title":{"rendered":"US DOL Targets Managers who Receive Tips in new Final Rule"},"content":{"rendered":"\n<p><br>The Department of Labor\u2019s Latest Final Rule Publication Regulates Managers Who Receive Tips.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"683\" src=\"https:\/\/forework.com\/wp-content\/uploads\/2022\/12\/blog8-1024x683.jpeg\" alt=\"\" class=\"wp-image-542\" srcset=\"https:\/\/forework.com\/wp-content\/uploads\/2022\/12\/blog8-1024x683.jpeg 1024w, https:\/\/forework.com\/wp-content\/uploads\/2022\/12\/blog8-300x200.jpeg 300w, https:\/\/forework.com\/wp-content\/uploads\/2022\/12\/blog8-768x512.jpeg 768w, https:\/\/forework.com\/wp-content\/uploads\/2022\/12\/blog8.jpeg 1100w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure><\/div>\n\n\n<p>The Wage and Hour Division of the U.S. Department of Labor has published its final rule addressing managers who receive tips and penalties for violations of the Fair Labor Standards Act (FLSA) (the \u201cSeptember Tip Final Rule\u201d). These regulatory amendments will be effective Nov. 23, 2021.<\/p>\n\n\n\n<p><strong>Managers Who Receive Tips<\/strong><\/p>\n\n\n\n<p>As expected, the Tip Final Rule tracks the 2018 Consolidated Appropriations Act (CCA) by prohibiting managers, supervisors and employers from keeping employees\u2019 tips, and it defines managers and supervisors in line with the executive exemption from overtime. Also as expected, the September Tip Final Rule allows mandatory tip pools to include employees who do not customarily and regularly receive tips if the employer pays all employees in the pool the full minimum wage and does not take a tip credit.<\/p>\n\n\n\n<p>The DOL clarified that managers, supervisors and employers who receive tips&nbsp;could contribute&nbsp;to a tip pool, but they&nbsp;could not receive&nbsp;tips from a tip pool.&nbsp;\u201c[T]he Department adopts changes to its regulations to clarify that, while an employer may not allow a manger or supervisor to keep other employees\u2019 tips by receiving tips from a tip pool or tip sharing arrangement, section 3(m)(2)(B) does not prohibit an employer from requiring a manager [or] supervisor who receives tips directly from customers to contribute some portion of those tips to eligible employees in an employer-mandated tip pooling or tip sharing arrangement.\u201d Even if a manager or supervisor meets the requirements to be paid with a tip credit and to participate in a tip pool, the DOL explained that if they qualified as a manager or supervisor under section, they cannot receive tips from the tip pool or keep other employees\u2019 tips. The DOL also noted that&nbsp;employers&nbsp;could similarly&nbsp;contribute&nbsp;tips to a tip pool.&nbsp;<\/p>\n\n\n\n<p>A key change is the DOL\u2019s decision to emphasize that supervisors and managers can keep tips only for services that they directly&nbsp;and solely&nbsp;provide. The DOL added the term \u201csolely\u201d in the September Tip Final Rule to \u201cprevent managers and supervisors from keeping tips when it is not possible to attribute the tip solely to the manager or supervisor.\u201d Thus, the supervisors and managers in compliance with the FLSA are not keeping \u201cany portion\u201d of other employees\u2019 tips. As an example, the DOL explains that a manager who \u201csimply runs food to a table for which a server is otherwise responsible\u201d may not keep any portion of the tip left for the server because \u201cthat tip was not earned solely by the manager or supervisor.\u201d&nbsp;<\/p>\n\n\n\n<p><strong>Penalties for Violations of the FLSA<\/strong><\/p>\n\n\n\n<p>The 2020 Tip Final Rule added to the DOL\u2019s regulations civil money penalties (CMPs) for violation of section 3(m)(2)(B) \u2013 the statutory prohibition of employers keeping employees\u2019 tips.&nbsp;See&nbsp;29 U.S.C. \u00a7 216(e)(2) (adding new penalty language to the FLSA). The DOL took issue with the 2020 Tip Final Rule\u2019s limitation of CMPs to only willful or repeated violations of section 3(m)(2)(B). So, the September Tip Final Rule follows the March 25, 2021 NPRM and does not restrict CMPs for violation of section 3(m)(2)(B) to only \u201crepeated or willful\u201d violations. The DOL reasoned that the CCA did not limit the DOL\u2019s power to assess CMPs for violations of section 3(m)(2)(B) to only willful or repeated violations and, instead, granted to the DOL the authority to assess CMPs \u201cas the Secretary determines appropriate.\u201d With these amendments, the DOL has \u201cadopt[ed] the same rules, procedures, and amount considerations for tip CMP assessments as the [DOL] applies for other FLSA CMP assessments, which will promote the goals of consistency and familiarity.\u201d For employers, this means the DOL can assess CMPs when an employer keeps employees\u2019 tips without having to establish the employer\u2019s violation was willful or repeated.<\/p>\n\n\n\n<p>The September Tip Final Rule goes beyond regulation of tipped employees by publishing amendments to the regulations governing when a violation of the FLSA overtime or minimum wage provisions is willful. The September Tip Final Rule amends sections 578.3(c)(2) and 579.2 in accordance with the NPRM so \u201can employer\u2019s receipt of advice from [the Wage and Hour Division] that its conduct is unlawful is \u2018not automatically dispositive\u2019 of a knowing violation . . . and . . . should not \u2018automatically subject\u2019 an employer to CMPs where the employer has a legitimate disagreement with the [Wage and Hour Division] concerning the FLSA\u2019s coverage.\u201d But employers should not get too excited, because the amendments also emphasize that other circumstances showing the employer knew its conduct was unlawful can be sufficient to show that a violation is knowing.&nbsp;\u201cAll facts and circumstances surrounding the violation must be taken into account when determining willfulness.\u201d<\/p>\n\n\n\n<p>The September Tip Final Rule also defines willfulness to include \u201creckless disregard of the FLSA.\u201d According to the DOL, these amendments establish that \u201can employer is in reckless disregard of the FLSA when, among other situations, the Department determines based on all of the facts and circumstances that the employer should have inquired into whether its conduct was lawful but failed to do so adequately.\u201d However, the DOL intended these amendments \u201cto make clear that reckless disregard can be proven by evidence other than that the employer should have inquired further but did not do so adequately.\u201d<\/p>\n\n\n\n<p>Employers should exercise caution when managers or supervisors keep tips received from customers even for services they directly provided, because amended section 531.52(b)(2) does not allow a manager or supervisor to keep such tips if another employee provided services for the same customer. Additionally, while the DOL provided some clarity in the regulations governing CMPs, it also included language the DOL interprets as expanding the scope of evidence that the DOL can use to support a willful violation.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Department of Labor\u2019s Latest Final Rule Publication Regulates Managers Who Receive Tips. The Wage and Hour Division of the U.S. Department of Labor has published its final rule addressing managers who receive tips and penalties for violations of the Fair Labor Standards Act (FLSA) (the \u201cSeptember Tip Final Rule\u201d). These regulatory amendments will be &hellip;<\/p>\n","protected":false},"author":1,"featured_media":542,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_coblocks_attr":"","_coblocks_dimensions":"","_coblocks_responsive_height":"","_coblocks_accordion_ie_support":"","content-type":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[2],"tags":[],"class_list":["post-541","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-employment-articles"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v23.8 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>US DOL Targets Managers who Receive Tips in new Final Rule - Forework<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/forework.com\/us-dol-targets-managers-who-receive-tips-in-new-final-rule\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"US DOL Targets Managers who Receive Tips in new Final Rule - Forework\" \/>\n<meta property=\"og:description\" content=\"The Department of Labor\u2019s Latest Final Rule Publication Regulates Managers Who Receive Tips. The Wage and Hour Division of the U.S. Department of Labor has published its final rule addressing managers who receive tips and penalties for violations of the Fair Labor Standards Act (FLSA) (the \u201cSeptember Tip Final Rule\u201d). 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