Trump's New Tip Pooling Rule Means Harsh Fines for Rule-Breakers

Trump's New Tip Pooling Rule Means Harsh Fines for Rule-Breakers

First, the back story:  The Fair Labor Standards Act (FLSA) sets the rules for paying minimum wage and overtime.  It allows employers to take a tip credit against its minimum wage obligations if certain conditions are met.  One of those conditions is that tipped employees must be allowed to retain all of their tips. There is one exception to this – that employers can require employees to participate in a valid tip pooling arrangement.  

There are various requirements for a tip pool to be valid but most importantly, the tips can only be shared with people who customarily and regularly receive tips. Typically, these jobs are in the front of the house.

The FLSA is silent as to whether these same restrictions apply to employers who don’t take a tip credit and instead just pay a full minimum wage.  In 2010, the Ninth Circuit ruled that they don’t apply if you don’t take the tip credit. In 2011, the DOL issued regulations saying that they apply whether you take the tip credit or not.

The Tip Pooling Loophole

In 2017, the Trump Administration proposed a rule that would clarify this issue.  

The rule sought to allow employers who pay a full minimum wage to include back of house workers in a tip pool.  But the rule as proposed left open a potential loophole – that in giving employers control over the tips (under the expectation that they would use them to pay back of house workers) that the rule would have also allowed employers to pocket the tips if they wanted to.  

This prompted an enormous uproar and ultimately the administration scaled back; the law would be revised to make clear that employers cannot under any circumstances keep any portion of their employees’ tips.

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Fast-Food Workers Protest in 50 Cities for $15 Minimum Wage

Fast-Food Workers Protest in 50 Cities for $15 Minimum Wage

Thousands of fast-food workers gathered in protest in almost 50 cities yesterday in support of a $15 minimum wage. 

On the 50th anniversary of the Memphis sanitation workers’ strike, workers hit the streets around lunch time in Detroit, Boston, Chicago, Oakland, and other cities across the U.S.

California, Colorado, the District of Columbia, Hawaii, Maine, Maryland and New York City are all expected to see a spike in minimum wage this year. NYC’s wage is going to reach $15 an hour by 2019. Maine and Colorado have a goal to implement $12 an hour by 2020.  

The Fight for $15 worker movement, that started in 2012 , has led to 20 cities initiating minimum wage increases in 2018. 

On the national level, workers and unions are also fighting for the $15 an hour minimum wage to be implemented as a federal law.

“We're going to send a message to corporations and politicians that their time of rigging the economy against workers is over," the Rev. W.J. Rideout, a Detroit protest organizer, to the “Free Press.” "We have to stand up and fight back.”   

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