New Department of Labor Rule Exposes Employers to Civil Penalties for Pocketing Workers’ Tips
The Fair Labor Standards Act prohibits employers from pocketing workers’ tips. On Sept. 23, the Department of Labor finalized a rule that permits the agency to fine employers that retain tips intended for workers, such as bartenders and servers.
Under the finalized rule, employers face a fine of up to $1,100 per violation, in addition to remaining liable to workers for the amount withheld. The civil penalty is intended to incentivize employers to comply with their legal responsibilities and act as an enforcement mechanism when they do not.
While the rule strengthens protections for workers, it also increases the circumstances in which employers may be fined. Previously, the proposed regulation authorized civil penalties only when employer violations were “repeated and willful.”
The rule also explains that, while supervisors and managers who receive tips may contribute to tip pools, they cannot receive tips from such pools. Rather, supervisors and managers are only permitted to keep tips that they receive directly from customers, for services the manager or supervisor “solely” provided. The addition of the word “solely” is intended to prevent supervisors and managers from receiving tips for merely assisting workers who regularly rely on tips.
The rule is set to take effect on Nov. 23.
Clark Hill Simply Smarter Employment Law SeminarExplore more
WEBINAR-Our Working Theory: Creating a Respectful Workplace is the Antidote to Sexual Harassment in the Workplace
Sexual Harassment remains a persistent problem in the workplace despite regulation, mandatory training, and national attention, such as the #MeToo Movement.
Clark Hill 2023 Healthcare Industry Dallas Summit
Clark Hill’s Healthcare Industry Attorneys invite you to join us for a complimentary dinner and program on the latest challenges and top trends in the healthcare industry.