203(m)

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While many state laws regulate the distribution of gratuities (as well as service charges and other fees), the overwhelming judicial view, as originally set forth by the Ninth Circuit in Cumbie v. Woody Woo and joined by district courts in other jurisdictions, holds that an employee’s right to tips under the FLSA flows exclusively…

The FLSA’s tip credit provision codified at 29 U.S.C. § 203(m) requires employers to notify employees of any tip credit taken by their employer against minimum wages owed. Prior to the DOL’s notice regulations issued on May 5, 2011 (codified at 29 C.F.R. § 531.59(b)), which were themselves the subject of legal challenge, the form…

The FLSA and state law often both regulate the distribution of tips. See here. Under the FLSA, an employer can require all “customarily tipped employees” to pool tips generally or require a specific “customarily tipped employee” to share tips with another “customarily tipped employee.”  Disputes often arise as to whether an employee is a “customarily…

Following up on proposed regulations issued in 2008 for notice and comment, the U.S. Department of Labor issued final regulations last week, effective 30 days following publication in the Federal Register. These regulations address the issues below but other than in regard to use of the tip credit under Section 3(m), the changes to the text…

As discussed here, Section 3(m) of the FLSA (like many state laws) places restrictions on which employees within a workforce can receive and share in tips. While the FLSA permits tip pooling “among employees who customarily and regularly receive tips," litigation in the hospitality industry often centers around the legality of tip pool participation by…