FLSA-Tip pooling and management

On Behalf of | Apr 22, 2020 | Fair Labor Standards Act (FLSA) |

Tip pooling is when all tipped employees are required to contribute a certain amount of their tips into one collective “pool” which is then divided evenly among that group of employees. The Fair Labor Standards Act (“FLSA”) regulates who is eligible to participate in tip pooling. Tip pooling is only allowed with employees who customarily and regularly receive tips. 29 U.S.C. A. § 201(3)(m). The FLSA has defined a employee who “customarily and regularly receives tips” as an employee engaged in an operation in which the employee customarily and regularly receives more than $30 a month in tips. 29 U.S.C. § 203(t)

An amendment to the FLSA, the “Consolidated Appropriates Act, 2018” was enacted on March 23, 2018. This amendment goes further into regulating who can and cannot participate in tip pooling. The act states that an employer, “may not keep tips received by its employees for any purposes, including allowing managers or supervisors to keep any portion of employees’ tips, regardless of whether or not the employer takes a tip credit.”

Therefore, it is crucial that no part of a tipped employees tips go to the business, management, or supervisors. There are no known exceptions to this rule. While tips can be used to ensure a tipped employee is receiving minimum wage, they cannot be used for any reason towards the salary or wage of management and supervisors. It is important to ensure that all tips are only going to employees who qualify to receive them in order to comply with Federal and State law.