by Kim Courtney, Esq.
September 22, 2017
The large disparity in the restaurant industry between pay for front and back of house staff may begin to level out soon, as a Federal Department of Labor regulation is being repealed. New regulations are expected to be passed in 2018, which will allow employers to include back of house staff in a tip pool, in certain circumstances.
This regulation change would not make it a requirement for food establishments to pool tips with the back of house staff, but they will have the option to do so, as long as their state law permits it. During the repeal process federal investigators are not allowed to enforce the current regulation barring this practice, although employers should be aware that employees would still have a private right of action against them during this period.
Once the regulation is officially repealed, Federal law would allow employers to allow pooled tips only for those employees who are paid an hourly wage of at least minimum wage. This means that employers can not include the back of house staff in a tip pool for employees like servers and bartenders who receive a sub-minimum wage of $2.13 per hour, and then receive a credit for the difference covered by tips to meet the minimum wage (which is quite common), pursuant to the Fair Labor Standards Act.
Therefore, in order to implement the pool, the employer would have to start paying servers and bartenders the full minimum wage, and then the tips could be pooled, thus giving the front of house staff a pay boost out of the employer’s pocket.
The upcoming new regulations would still be subject to any state laws regarding tip pools, which may still prohibit the practice.