The 1.3 Trillion Dollar Spending Bill signed by the President on March 23, 2018 contains a pair of provisions that significantly affect tip-pooling, especially within the restaurant, hotel and bar industries. These provisions entirely negate a Department of Labor (DOL) proposal from late 2017 that would have enabled employers in these industries who paid a full minimum wage to keep some or all of the tips for themselves.
The first provision is that the employer and its managers and supervisors are expressly prohibited from retaining or collecting tips made by employees, regardless of whether or not the employer takes a tip credit. The penalties can be severe for violations – civil penalties up to $1100 per occurrence and damages including the differential lost if a tip credit system was being utilized.
The second provision is that subject to the absolute prohibition on management or supervisory participation, tip sharing is permitted between tipped and non-tipped (examples includes busboys, dishwashers and cooks) employees if and only if the employer is not using a tip credit, ie, paying full minimum wage to all employees. If the tip credit is being taken, tip sharing is not permitted.