Federal Register - March 25, 2021
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Source: Federal Register
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Federal Register / Vol. 86, No. 56 / Thursday, March 25, 2021 / Proposed Rules
5. Should the Department revise the language in 531.52b2 to clarify that a manager or supervisor may keep their own tips in a scenario in which tips provided to a manager or supervisor are comingled with tips provided to other tipped employees? How would such a regulation accurately identify the manager or supervisors tips based on the service they provide, without allowing a manager or supervisor to keep any portion of another employees tips which section 3m2B of the Act prohibits?
The Department also seeks comments on whether it should adjust its tip pooling regulations at 531.54c3 and d, to permit managers and supervisors to contribute tips to employer-mandated tip pooling or tip sharing arrangements, provided they do not receive any tips from other employees. As noted above, the preamble accompanying the 2020
Tip final rule interprets 531.54c3
and d to preclude managers and supervisors from contributing, as well as receiving, tips from mandatory tip pooling or sharing arrangements.16 In the context of a restaurant employer, for example, this means that the employer may require servers to give a portion of their tips to the bussers, but is prohibited from requiring a manager or supervisor who also waits tables to similarly contribute a portion of their tips to the bussers. In their comment regarding the NPRM for the 2020 Tip final rule, the National Restaurant Association suggested that the Department allow managers or supervisors who receive tips from customers to contribute tips to a mandatory tip pool that includes other non-managerial employees, as long as the manager or supervisor does not receive any monies from such a pool, stating that this outcome is consistent with section 3m2B and would be beneficial to tipped employees.
Although the Department is not proposing specific regulatory changes to the references to managers or supervisors in 531.54c3 and d or revising its interpretation of these provisions at this time, the Department is seeking additional information on these provisions for possible consideration of changes in the final rule:
16 The Department noted that allowing managers and supervisors to participate in tip pools for one purpose contributing tips and not for another receving tips would create confusion among employers and employees, and could lead to situations where it would be difficult for employers to demonstrate compliance with the prohibition on employees sharing tips with managers and supervisors. 85 FR 86764.
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1. Should the Department consider allowing managers and supervisors who receive tips to contribute to, but not collect from, employer-mandated tip pooling or tip sharing arrangements?
Specifically, should the Department allow employers to require managers and supervisors to contribute a portion of their tips to mandatory tip pooling or sharing arrangements but maintain the prohibition on managers and supervisors receiving any tips from such pooling or sharing arrangements? 17
2. If the Department were to allow managers and supervisors to contribute a portion of their tips to employermandated tip pools or sharing arrangements but not allow them to receive tips from such pools or sharing arrangements, what are the benefits and challenges of such an approach?
3. Should the Department consider, instead, allowing managers and supervisors who receive tips to contribute to employer-mandated tip pooling or tip sharing arrangements, but receive out of the tip pool no more than what they contributed? Would such an arrangement be feasible for employers to administer while fully ensuring managers and supervisors do not keep other employees tips?
V. Questions About Recordkeeping Requirements for Enforcing Section 3m2B
Section 11 of the FLSA gives the Department the authority to prescribe by regulation or order recordkeeping requirements as necessary or appropriate to enforce the provisions of the FLSA. 29 U.S.C. 211c. In the 2020 Tip final rule, the Department adopts new recordkeeping requirements at 29 CFR 516.28b that apply to employers who do not take a tip credit, but still collect employees tips to operate a mandatory tip pool. Section 516.28b requires these employers to identify on their payroll records each employee who receives tips, including non-tipped employees who receive tips from a nontraditional tip pool, and to keep records of the weekly or monthly amount of tips received by each employee, as reported by the employee to the employer. These requirements are consistent with some of the requirements for tipped employees that apply to employers who take a tip credit, set forth in 516.28a. The new requirements address other changes made by the 2020 Tip final rule, consistent with the CAA, which permit 17 The 2020 Tip final rule determined that this is equivalent to allowing managers or supervisors to keep a portion of the tips received by other employees. See 85 FR 86756, 86764.
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employers who do not take a tip credit to include non-tipped employees in mandatory nontraditional tip pools.
These requirements in 516.28b will go into effect on April 30, 2021.18
The Department is not considering revising its recordkeeping requirements in this rulemaking. However, the Department is seeking information about whether the recordkeeping requirements in 516.28 should be revised in a subsequent rulemaking to better facilitate the enforcement of section 3m2B, which creates a new cause of action when employers keep tips, regardless of whether or not the employer takes a tip credit. Based on its enforcement experience, the Department is concerned that because the new regulations do not require that employers account for all tips that are contributed to a mandatory tip pool or tip sharing arrangement, it may be difficult for employees and for the Department to know if the employer is keeping tips. This may be of particular concern when the employer collects and distributes the tips in such an arrangement. As one commenter noted in response to the notice of proposed rulemaking on the delay of the 2020 Tip final rule because many tips are not provided in cash, unscrupulous employers have an opportunity to misappropriate a portion of their workers income; and few employers maintain accurate and complete tip records. . . . . See NELP.
Specifically, the Department seeks comments on the following issues, with regard to employer-mandated tip pooling or tip sharing arrangements:
1. What records are necessary or appropriate to enforce the new prohibition on employers keeping tips, particularly when employers mandate tip pooling or tip sharing arrangements?
a. Should the Department require employers to keep a record of the total contributions to an employer-mandated tip pooling or tip sharing arrangement, in order to ensure that employers are not keeping tips and that all tips are distributed to employees?
b. Should the Department require employers to keep track of the total amount in tips that each employee receives from an employer-mandated tip pooling or tip sharing arrangement, in order to ensure that employers are not 18 These requirements were scheduled to go into effect on March 1, 2021, but on February 26, 2021, the Department delayed the 2020 Tip final rules effective date until April 30, 2021, to give the Department additional time to consider issues of law, policy, and fact that warranted additional review. See 86 FR 11632.
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