DOL Tries to Clear Up Confusion About FLSA Tip Credit
Author: Michael Cardman, XpertHR Legal Editor
April 11, 2018
After Congress amended the Fair Labor Standards Act (FLSA) last month to prohibit managers and supervisors from keeping employees' tips, many employers were left to wonder: who exactly is a manager or a supervisor?
In a new Field Assistance Bulletin, the US Department of Labor (DOL) says that, as an enforcement policy, it will use the duties test for executive employees to determine whether an employee is a manager or supervisor.
Under this test, an employee will be considered a manager or a supervisor if he or she:
- Has a primary duty of management of the business or a recognized department or subdivision of the business;
- Customarily and regularly directs the work of two or more employees; and
- Possesses hiring and firing authority or has the power to affect the employment status of other employees through suggestion or recommendation.
The DOL also clarified that:
- Its enforcement policy allowing employers to retain a percentage of tips that must be paid to a credit card company when tips are charged on a credit card still applies despite the FLSA amendments;
- It will follow its normal procedures for assessing civil money penalties, including determinations of whether a violation is repeated or willful, when assessing new penalties against employers for unlawfully keeping tips; and
- Its July 20, 2017, non-enforcement policy concerning retention of tips by tipped employees who are paid the full FLSA minimum wage will not apply to new investigations beginning on or after March 23, 2018 (the date the FLSA was amended).