On Jan. 19, 2017, the National Restaurant Association (NRA) filed a petition that asks the U.S. Supreme Court to consider whether or not the Department of Labor (DOL) had the authority to issue a rule that prohibits kitchen employees who don’t customarily receive tips from participating in tip pools, whether or not the restaurant takes a tip credit. The NRA has stated that it expects that the Court will decide in about 30 days if it will hear this challenge to the DOL’s rule.
Currently, there is a conflict between the federal Ninth and Fourth Circuit Courts of Appeal over the issue of including kitchen employees in tip pools. In 2010, the Ninth Circuit had decided that kitchen employees could share in tip pools where restaurants did not take a tip credit against the minimum wage. The DOL responded to that decision in 2011 by issuing the challenged rule. Then, in February of 2016, the Ninth Circuit, reversing course, approved the challenged rule. In a 2013 decision, the Fourth Circuit allowed these tip pools where restaurants do not take a tip credit.
So, it appears that the Supreme Court will hear this case. If it does, it will probably not be decided until the Court has a new justice bringing it to a full complement of nine, and the Trump administration most likely will nominate candidates to the Court that will be business friendly. We will keep you posted about the status of this important tip issue, which is a factor in the growing disparity in compensation between the front- and back-of-the house.
Miller Law Group exclusively represents business in all aspects of California employment law, specializing in litigation, wage and hour class actions, trials, appeals, compliance advice and counseling. If you have questions about these developments or other workplace obligations, please contact us at (415) 464-4300.
This Alert is published by Miller Law Group to review recent developments in employment law. This material is designed to provide informative and current information as of the date of the Alert, and should not be considered legal advice.