Department of Labor Appears Set to Tip the Balance Back in Favor of Tip-Pooling

Department of Labor Appears Set to Tip the Balance Back in Favor of Tip-Pooling In December, the Trump Department of Labor issued a Notice of Proposed Rulemaking seeking to roll back yet another Obama-era regulation. This time, the target is the Department of Labor’s 2011 rule restricting mandatory tip pooling. As many employers in the hospitality and food service industries know, the Fair Labor Standards Act permits employers to establish tip pools among employees that “customarily and regularly” receive tips, like waiters, bartenders, and other service-oriented staff members.  Tip pools have generally been restricted to staff members who participate in front-of-house positions that more directly serve customers. The FLSA requires that the means of distribution must be fair and reasonable and that the pool cannot distribute tips to the employer or an agent of the employer. Like each workplace, tip pools vary widely in how they are set up and executed. It should then come as no surprise that lawsuits have sprung up to challenge the validity of tip pools or the laws or regulations permitting them—often with inconsistent results. One such result was the 2010 Ninth Circuit Court of Appeals case Cumbie v. Woody Woo, Inc., in which the court held that so long as an employer paid the front-of-house staff over the minimum…