Changes for restaurant workers may be on the menu in 2018

On December 5, 2017, the U.S. Department of Labor (“DOL”) published a Notice of Proposed Rulemaking in connection with the sharing or “pooling” of tips.  Specifically, the goal of the proposed rule is to abolish a 2011 tip regulation that restricted the “pooling” of tips.  Under the current federal rule, a tip pool may not include dishwashers, cooks, chefs, and janitors because such employees do not “regularly and customarily receive tips.”  In contrast, the proposed rule would allow these “back of the house” employees to participate in tip pools, although they do not usually receive direct tips.  According to a press release published in conjunction with the new rule, “[T]he proposal would help decrease wage disparities between tipped and non-tipped workers – an option that is currently restricted by a rule promulgated in 2011 that has been challenged in a number of courts.”  Instead of the usual thirty-day comment for the proposed rule period, the DOL published a notice in the Federal Register extending this comment period for an additional thirty days, to February 5, 2018.

In addition, the Supreme Court may also consider the tip-pooling issue in an attempt to resolve the different opinions of lower courts.  The U.S. Court of Appeals for the Ninth Circuit held that the DOL was permitted to apply the Fair Labor Standards Act’s (“FLSA”) tip pooling restrictions to employers that do not take a tip credit in Oregon Restaurant and Lodging Ass’n v. Perez.  However, in Marlow v. The New Food Guy, Inc., the U.S. Court of Appeals for the Tenth Circuit held that some employers could lawfully claim servers’ tips and use them as they want.  Based on the inconsistent rulings, the Supreme Court may hear arguments to clarify the situation.