What happened?

On January 16, 2025, the Department of Labor issued two opinion letters on Family and Medical Leave (FMLA) and the Fair Labor Standards Act (FLSA). This update concerns the FLSA opinion letter.

Overview:

The FLSA Opinion Letter clarifies that managers and supervisors who meet the executive employee duties test cannot receive tips from a tip pool, even if they work in a non-supervisory capacity during a shift.

• This affects employers by requiring them to carefully evaluate which employees qualify as managers or supervisors to ensure compliance with tip pooling regulations.
• The document emphasizes that the primary duty test is based on the employee’s job as a whole and not on a shift-by-shift basis.
  • A manager or supervisor is defined as an employee who meets the executive employee duties test, which includes directing the work of at least two other employees, having the authority to hire or fire, and having a primary duty of managing the enterprise or a recognized department.
• Section 3(m)(2)(B) of the FLSA prohibits employers from keeping employees’ tips or allowing managers or supervisors to keep any portion of employees’ tips.
• Managers or supervisors may keep tips they receive directly from customers based on the service they directly and solely provide.

Additional Details

• Opinion
  • Team Leaders and Assistant Team Leads:
    • If they meet the executive employee duties test and qualify as managers or supervisors, they may not receive tips from a tip pool, even if they work a shift in a non-supervisory capacity.
    • An employee’s primary duty is determined on at least a workweek basis, not shift-by-shift.
  • Shift Leads:
    • If they do not meet the executive employee duties test and are not considered managers or supervisors, they may receive tips from a tip pool, even if they are the highest-ranking employee during a shift.
  • Tip Pools Composed Solely of Managers and Supervisors:
    • Section 3(m)(2)(B) prohibits managers and supervisors from keeping any portion of employees’ tips, so tip pools composed solely of managers and supervisors are not permitted.

Source References

• DOL FLSA Opinion Letter (January 16, 2025)

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