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New NPRM for tip regulation

An employee's pay plays a strong part in determining the quality of life that the employee is able to sustain. As such, it can be quite beneficial for employees to stay abreast of current laws.

The Department of Labor is looking to make changes to the current employment law with a new tip regulation proposal. There are a few important things to understand about this possible change.


The new proposal is a Notice of Proposed Rulemaking, which falls under the FLSA. In short, the FLSA regulates the proper pay of wages, from hourly pay to overtime, as well as certain employment standards. On October 7th, the Department of Labor introduced the new NPRM for consideration.


The Consolidated Appropriations Act of 2018 is a spending bill that housed increased spending for various programs. It also included regulations for employers regarding employees' tips. Under the CAA, employers are prohibited from keeping employee tips from them. Certain parts of this act are implemented in the new NPRM. 

Tip regulation

There are a few ways the provisions of the new NPRM may affect employees. Employers are still not able to withhold tips; however, they may allocate them differently, depending upon their tip credit status. Particularly, those employers who do not choose to take a tip credit may choose to create a tip pool that distributes tips among employees who do usually receive tips and those who do not. On the other hand, those employers who opt to take a tip credit will be able to instate a tip pool among workers who do traditionally receive a tip, even if certain employees perform both tipped and non-tipped duties.

While these regulations are in place to protect employees, it is important that employees know how they apply in their situations. In doing so, employees can take full advantage of their rights to receive the wages they deserve.

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