U.S. Department of Labor Announces Tips CMP Final Rule
On September 23, 2021, the U.S Department of Labor announced publication of a final rule (Tips CMP final rule). Consistent with the Consolidated Appropriations Act of 2018, the final rule restores the department’s ability to assess civil money penalties (CMPs) of up to $1,100 per violation against employers who take tips earned by their employees, regardless of whether those violations are repeated or willful. The revision further aligns the Department’s regulations with applicable precedent and how the department actually litigates willfulness and provides improved guidance on circumstances where employers’ conduct may be willful.
Additionally, the final rule modifies regulatory provisions adopted in the 2020 Tip final rule addressing managers and supervisors. This final rule clarifies that while managers or supervisors may not receive tips from mandatory tip pools, managers and supervisors are not prohibited from contributing tips to eligible employees in such pools.
The final rule withdraws two portions of the 2020 Tip final rule related to the assessment of Civil Money Penalties (CMPs) and finalizes proposed changes to those portions of the 2020 Tip final rule.
The final rule becomes effective November 23, 2021.
CMPs represent an important equalizer in the economy by helping to ensure fair competition for responsible employers.
The Tips CMP final rule emphasizes that managers and supervisors cannot keep employees’ tips. Tipped workers who play an essential role during the pandemic and the economic recovery count on the tips they receive from customers who reward them for their hard work.
The Wage and Hour Division will assess CMPs for employer violations as appropriate. We focus our efforts on proactive compliance, delivering education, outreach, and compliance assistance to provide employers the information and tools they need to comply with the law. Our enforcement efforts, including the assessment of CMPs, incentivize employers to comply with the law, and allow us to send a clear message when employers violate the law.
For more information about the FLSA or other laws it enforces, visit the Wage and Hour Division, or call toll-free 1-866-4US-WAGE.
This announcement originally appeared in the U.S. Department of Labor Email Announcement on September 23, 2021.