A Tip for Restaurant Managers and Employers

The final rule regarding restaurant tips is on its way despite being delayed.

Currently, after April 30, 2021, an employer or manager who keeps employee tips may be in violation of the regulations interpreting the Fair Labor Standards Act (FLSA). The Department of Labor notes “The ‘Tip Regulations Under the Fair Labor Standards Act (FLSA)’ final rule (2020 Tip final rule) was published on December 30, 2020, with an effective date of March 1, 2021. See 85 FR 86756. On February 26, 2021, the Department issued a final rule delaying the effective date until April 30, 2021, in order to allow the Department the opportunity to review issues of law, policy, and fact raised by the 2020 Tip final rule. See 86 FR 11632. On April 28, 2021, the Department announced a final rule (Partial Delay final rule) delaying the effective date of three portions of the 2020 Tip final rule for eight months, until December 31, 2021.

The parts delayed pertain to “… the assessment of and the application of the FLSA tip credit to tipped employees who perform tipped and non-tipped duties (dual jobs). See FR 2021-08927.” The rest is effective, however, April 30. It clearly precludes employers, supervisors, and managers from keeping the tips of employees. In this final rule, the DOL among other things explains that the rule “explicitly prohibits employers—regardless of whether they take a tip credit—from keeping employees’ tips for any purpose, which includes prohibiting managers and supervisors from keeping tips received by employees …”.

So, starting Saturday, May 1, 2021, if you tip a waiter or waitress he or she may actually get to keep the tip. And if not the Department of Labor has a clear tip for all restaurant owners, employers, managers, and supervisors – don’t keep the tips!

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