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DOL Issues Press Release Proposing to Reverse Position on Mandatory Tip Pools

The Department of Labor issued a press release December 4, 2017, proposing to reverse its earlier position that employers of tipped workers could not impose a mandatory tip pool that included non-tipped workers, even if the employers did not take a tip credit.The DOL faced a legal challenge in the 9th Circuit on the issue, and the release indicates the DOL is retreating from that position.

Assuming this change goes through, employers who pay workers the full federal minimum wage can allow employees who do not traditionally receive tips directly (such as restaurant cooks and dish washers) to participate in tip pools. However, employers who take the tip credit still will be restricted in who may participate in tip pools. In addition, certain states have specific rules limiting tip pooling in those states.

The release is available at https://www.dol.gov/newsroom/releases/whd/whd20171204

DISCLAIMER: The information provided is for general informational purposes only. This post is not updated to account for changes in the law and should not be considered tax or legal advice. This article is not intended to create an attorney-client relationship. You should consult with legal and/or financial advisors for legal and tax advice tailored to your specific circumstances.

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