Tip Sharing– Does the Recent Federal Rule-Change Affect Your Restaurant?

Valiant Marketing Compliance, Restaurants, Rules and Regulations, Tip Reporting

Back in December 2017, the Department of Labor formally introduced a proposed rule-change that would potentially require restaurants to go back to the good ol’ days of tip sharing. Specifically, requiring the front of the house (“FOH”) to share their tips with the back of the house (“BOH”).

 

What is the likelihood that this will actually affect your restaurant?
We contacted Ellenoff Grossman & Schole LLP’s Employment Law Practice Group Leader Amanda M. Fugazy, Esq. to give us her expert take:

 

“If your restaurant is located in New York, California, Massachusetts, Connecticut, or Washington D.C., then the Federal Department of Labor’s new proposed position that restaurants may require their FOH staff to share their tips with their BOH staff does not, in effect, change the law as it applies to your restaurant.

 

In other words, regardless of this proposed change in the Federal DOL’s position, you still cannot require your FOH staff to share their tips with your BOH employees. This is so because the laws of New York, California, Massachusetts, Connecticut, and Washington D.C. forbid management from compelling service staff to share their tips with kitchen staff. New York, California, Massachusetts, Connecticut, and Washington D.C. limit tip pools to certain types of employees, typically those who provide direct service or assist in providing direct service to patrons or those who “customarily” receive tips.”

 

There you have it – if you’re running your restaurant in New York, California, Massachusetts, Connecticut or Washington D.C., you cannot require your FOH to share their tips with the BOH, regardless of what the Federal Government says.

 

What Happens Next?
Following the formal introduced proposed rule-change on December 5th 2017, a 30-day period of public comment was initiated. On December 15th, the public comment period was extended to 60 days, ending Monday February 5th. If the rule goes into effect, it likely won’t escape a spattering of court challenges.

***

If you have questions or would like additional information, please contact EGS’s Employment Law Practice Group Leader, Amanda M. Fugazy at afugazy@egsllp.com

 

*Published solely for the informational interest of friends and clients of Ellenoff Grossman & Schole LLP and should in no way be relied upon or construed as legal advice.