Congress Overturns DOL’s New Tip Rule

It’s a unique situation when the Legislative and Executive branch can agree on legislation impacting the workplace.  In the past decade or so almost all of the action impacting workplace rules has come from the Executive branch via Executive Order or regulatory action from the regulatory agencies.  With the recent omnibus budget bill passed by Congress and signed by the President, however, there was one of those rare occurrences when a compromise occurred, impacting employers.  Take a picture because it’s unlikely to happen again in the near future.        


Inserted into the new 2,232 page omnibus budget bill is a provision prohibiting the Department of Labor (DOL) from implementing its proposed new tip rule, keeping the Obama-era tip rule in place. Under the Obama DOL rules employers are prohibited from sharing tips with traditionally non-tipped staff – e.g. cooks, dishwashers, managers, hosts.    

The DOL recently proposed allowing non-tipped staff to share in a tipping pool.  The result would have been that employers could create tip pools with back of the house staff and management.  The rule was considered a win for hospitality employers who could spread the tip wealth around to non-tipped staff, presumably to give them more money in tips instead of wages. 

With the new budget provision the Trump DOL’s proposed tip change was effectively killed. Given the feverish opposition to the proposed tip rule change I suspect we are unlikely to see its return.     


Thompson Coe’s Tips of the Week are not intended as a solicitation, do not constitute legal advice and do not establish an attorney-client relationship.