Margarita M. Phillips 
Dive brief:
- The US Department of Labor will expand its ability to impose fines on employers who retain tips for workers, he announced Thursday. The change will apply to accidental or initial infractions.
- With the final rule, the agency will withdraw a Trump-era standard that allowed it to assess such sanctions only for deliberate or repeated violations. DOL can assess up to $ 1,100 for each violation.
- The rule was published in the Federal Register on Friday and will take effect 60 days from that date.
Dive overview:
Thursday’s announcement represents the latest in a series of changes to regulations regarding worker bonuses.
Under the Obama administration, the DOL changed the tip rules to favor employees. The agency then changed course under the Trump administration, addressing tip pools, the 80/20 rule and civil penalties, as described above. The Biden administration is now working to reverse some – although not all – of these updates.
In addition to addressing civil penalties, the Friday rule may also expand the possibilities that a violation will be considered intentional. Previously, a violation was considered intentional if the employer received notice from the agency that their actions were illegal or if the employer had acted in “reckless disregard” of the Fair Labor Standards Act. Now, the regulation will state that “a reckless disregard of the requirements of the Act means, among other situations, that the employer should have investigated further to find out whether its conduct complied with the Act and did not conduct a proper investigation. The DOL also said it would take into account “all the facts and circumstances surrounding the violation.”
The rule will also clarify that while managers and supervisors cannot receive tips from mandatory tip pools or tip-sharing agreements, they can contribute to such agreements, DOL said. And a manager or supervisor can retain tips “only when the manager or supervisor receives tips from customers directly for the service that a manager or supervisor provides directly and” only. “
These changes aim to strengthen protections for tipping workers “who are largely women, immigrants and people of color,” a DOL official said in a statement, advancing fairness in the workplace .
“Financial penalties are an incentive for employers to comply with their legal responsibilities,†continued Jessica Looman, Acting Administrator of DOL’s Wages and Hours Division; “When employers fail to comply, these sanctions are a useful enforcement tool that we can use to help achieve compliance.”
