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On December 22, 2020, the U.S. Department of Labor (DOL) issued its final rule modifying federal regulations concerning compensation for “tipped employees.” The new final rule follows 2018 federal legislation, which amended the Fair Labor Standards Act (FLSA) to, among other things, prohibit employers from keeping their employees’ tips “for any purposes, including allowing managers or supervisors to keep any portion of employees’ tips” even if they do not claim a tip credit.
Background
The FLSA generally requires covered employers to pay their employees at least the federal minimum wage, which is currently $7.25 per hour. An exception applies to tipped employees (employees who customarily and regularly receive more than $30 per month in tips), who generally earn the bulk of their total compensation through tips. The FLSA permits an employer that fulfills certain requirements to credit a portion of the tips
Wednesday, December 23, 2020
On December 22, 2020, the U.S. Department of Labor (DOL) issued its final rule modifying federal regulations concerning compensation for “tipped employees.” The new final rule follows 2018 federal legislation, which amended the Fair Labor Standards Act (FLSA) to, among other things, prohibit employers from keeping their employees’ tips “for any purposes, including allowing managers or supervisors to keep any portion of employees’ tips” even if they do not claim a tip credit.
Background
The FLSA generally requires covered employers to pay their employees at least the federal minimum wage, which is currently $7.25 per hour. An exception applies to tipped employees (employees who customarily and regularly receive more than $30 per month in tips), who generally earn the bulk of their total compensation through tips. The FLSA permits an employer that fulfills certain requirements to credit a portion of the tips received by their