Paul DeCamp, Member of the Firm in the Employment, Labor & Workforce Management practice, in the firm’s Washington, DC, office, was quoted in the Bloomberg Law Daily Labor Report, in “No Tax on Tips Muddled by Confusion, Unintended Consequences,” by Rebecca Rainey and Erin Slowey. (Read the full version – subscription required.)
Following is an excerpt:
Congress has delivered one of President Donald Trump’s hallmark campaign promises: a tax break for tipped workers. But the federal government’s next task, standing up the new law, may have unintended complications and consequences for workers and businesses. …
More Tips …
But management-side attorneys caution that there’s legal limitations to the types of workers who can participate in tip pools or receive tips.
Under the Fair Labor Standards Act, employers are allowed to pay tip-earning workers as little as $2.13 per hour so long as the worker earns at least $30 a month in tips and the employer ensures their tip earnings reach at least the minimum wage at the end of the workweek.
Workers can be treated as tip-earning employees so long as they are in an occupation “in which he customarily and regularly receives more than $30 a month in tips.”
Employers also can allow staff to enter into tip pooling arrangements where gratuities are split evenly among tip-earning staff. But if a tip pool includes any workers who don’t normally receive tips, the employer must pay all staff in the arrangement the full federal minimum wage of $7.25.
“I think we need to be careful about not trying to create something out of nothing if a position is not fundamentally one that involves the kinds of activities that ordinarily in the language of the statute, customarily and regularly receive tips,” said Paul DeCamp, a management-side attorney at Epstein Becker & Green. “Trying to make a tip position out of one that isn’t really within the wheelhouse for tips creates probably more problems than it solves.”
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