Federal Register - September 24, 2021
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Source: Federal Register
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Federal Register / Vol. 86, No. 183 / Friday, September 24, 2021 / Rules and Regulations
The Department also declines to amend the regulations to allow mandatory tip pools comprised only of managers and supervisors, as proposed by NRA. The statute does not permit such arrangements: Managers and supervisors are employees under the FLSA, see 29 U.S.C. 203e1, and 3m2B prohibits employers from allowing managers or supervisors to keep other employees tips. 15 This includes other managers and supervisors tips. Moreover, to permit scenarios in which a higher-ranking manager or supervisorfor example, the general manager of a restaurantcould keep tips from a lower-ranking manager or supervisorfor example, a shift supervisor who also tends barwould undermine the CAAs mandate of preventing employers and their agents from keeping employees tips.
2. Managers and Supervisors May Contribute Tips To, But Not Receive Tips From, Tip Pools In this final rule, the Department also amends 531.54c3 and 531.54d to clarify that an employer may not allow a manager or supervisor to receive tips from employer-mandated tip pools or tip sharing arrangements, but may require a manager and supervisor to contribute tips to such an arrangement.
As discussed above, section 3m2B
prohibits managers and supervisors from keeping any portion of other employees tips. See also 531.52b2.
Sections 531.54c3 and d, as amended by the 2020 Tip final rule, implement this prohibition by barring employers from including such managers and supervisors in mandatory 15 A manager or supervisor who performs tipped work may satisfy the definition of a tipped employee under section 3t because they are engaged in an occupation in which they customarily and regularly receive more than $30
a month in tips. See 29 U.S.C. 203t. Under those circumstances, an employer may take a tip credit for the hours worked in the tipped occupation pursuant to section 3m2A, assuming that all other requirements for the tip credit are satisfied.
If the employer does so, it may not require the tipped manager to contribute tips to a nontraditional tip pool, and may only require the tipped manager or supervisor to contribute their tips to a traditional tip pool comprised of other tipped employees. Regardless of whether an employee is engaged in a tipped occupation, however, if the employee satisfies the duties test for managers and supervisors, including the requirement that management is the employees primary duty, the employee cannot receive other employees tips from a mandatory tip pool or tip sharing arrangement pursuant to section 3m2B.
Thus, even if a manager or supervisor is engaged as a tipped employee under section 3t and can be paid with a tip credit and participate in a tip pool under section 3m2A, they may also still qualify as manager or supervisor under 3m2B, in which case they would be prohibited from receiving tips from the tip pool, and from otherwise keeping other employees tips.
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tip pools. The preamble accompanying the 2020 Tip final rule interpreted 531.54c3 and d to prohibit employers from requiring managers and supervisors to contribute, as well as from allowing them to receive, tips from mandatory tip pooling or sharing arrangements. 85 FR 86764. As a result of the Departments interpretation in the 2020 Tip final rule, a restaurant employer, for example, can require nonmanagerial servers to give a portion of their tips to the bussers, but is prohibited from requiring a manager who also serves tables to similarly contribute. Or a salon employer may require non-supervisory stylists to share a portion of tips with the shampoo assistant, but cannot require a stylist who is also a supervisor to do the same.
In the CMP NPRM, the Department therefore sought comment on whether it should adjust its regulations to allow managers and supervisors, like other employees who receive tips, to contribute tips to eligible employees in mandatory tip pools or tip sharing arrangements, so long as: 1 They do not receive any tips from a pool; or 2
alternatively, so long as they receive out of the tip pool no more than what they contributed.
Commenters overwhelmingly supported a change to allow employers to require managers and supervisors, like other employees who receive tips, to contribute to tip pooling or sharing arrangements. See, e.g., EPI; Employee Rights Center; Public Justice Center;
ROC United; North Carolina Justice Center; Workplace Justice Project;
National Employment Lawyers Association; National Employment Law Project; Kentucky Equal Justice Center;
National Partnership for Women and Families; National Womens Law Center; Worker Justice Center of New York; NRA.16 NRA noted that mandatory tip sharing arrangements in which managers or supervisors who have responsibility for serving tables share a portion of their tips with bartenders, bussers, or other employees 16 Several commenters argued that permitting managers and supervisors to contribute to mandatory tip sharing arrangements makes it all the more important that only employees who are bona fide managers and supervisors are classified as such, and urged the Department to reconsider the definition of manager or supervisor adopted in its 2018 FAB and 2020 Tip final rule. ROC
United; NELP; National Partnership for Women and Families. These commenters urged the Department to include a salary component in the definition. The CMP NPRM did not contemplate changes to the regulatory definition of the terms manager or supervisor, however, and revisions incorporating a salary level are outside of the scope of this rulemaking. The Department lacks sufficient information to consider such changes as part of the final rule.
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who help them, are common in the restaurant industry. Commenters also stated that allowing managers and supervisors who earn tips to contribute them to eligible employees in mandatory tip pools would benefit nonmanagerial employees. See Werman Salas; NRA. In addition, the Center for Workplace Compliance commented that modifying the regulations to allow managers and supervisors to contribute to mandatory tip pools would benefit employers by giving them a little more flexibility to adopt tip pooling practices that work best in their industry. NRA
also stated that the statute does not prohibit employers from requiring managers and supervisors to share their own tips.
To the extent that commenters addressed the possibility of allowing managers and supervisors who contribute tips to a tip pool to receive tips from the arrangement up to the amount they contributed, commenters opposed this alternative. See Werman Salas; NRA. Werman Salas asserted that a policy allowing managers or supervisors to receive some tips from a tip pool, but no more than what the manager or supervisor contributes, would be difficult or impossible to apply. In contrast, allowing employers to require managers and supervisors to contribute a portion of their tips to mandatory tip pooling or sharing arrangements, while preserving the prohibition on managers and supervisors receiving any tips from such pooling or sharing arrangements would maintain the integrity of the tip pooling arrangements without improper participation from managers or supervisors.
Having considered the comments, the Department adopts changes to its regulations to clarify that, while an employer may not allow a manager or supervisor to keep other employees tips by receiving tips from a tip pool or tip sharing arrangement, section 3m2B
does not prohibit an employer from requiring a manager and supervisor who receives tips directly from customers to contribute some portion of those tips to eligible employees in an employermandated tip pooling or tip sharing arrangement. The final rule similarly provides that employerssome of whom may themselves be managers or supervisors who perform tipped work may not receive tips from a tip pool or sharing arrangement, but does not bar employers who receive tips directly from customers from sharing those tips with their employees.
The Department agrees with commenters that allowing employers to require managers and supervisors to
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