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Hawai‘i Life, Hawai‘i Law Matters

What the Recent Spending Bill Means for Employers

Mar 26, 2018

Congress has avoided another government shutdown. The legislation, titled the “Consolidated Appropriations Act, 2018,” is a 2,149-page behemoth that funds the federal government until September 30, 2018.

Previously, the Trump Administration had signaled its intent to decrease funding for federal enforcement agencies, such as the Department of Labor, National Labor Relations Board, and the Equal Employment Opportunity Commission. This, inevitably, would have resulted in staff reductions and decreased enforcement actions against employers. The bill, however, maintains these agencies’ funding, and in some instances, increases funding.

Also tucked into the bill is a provision that amends the Fair Labor Standards Act and related regulations. The bill repeals a controversial 2011 tip pooling rule, which prohibited all employers, whether or not they used the tip credit, from requiring tipped employees to share their tips with co-workers who did not “customarily and regularly receive tips.” 

Now, employers may require that wait staff and bartenders share tips with kitchen workers and other non-tipped employees, so long as the employer does not take the tip credit. This legislation may also affect tipped employees in other roles and industries, such as bellhops and valets. 

Employers that decide to take the tip credit, however, are still prohibited from instituting mandatory tip pools that benefit employees who do not “customarily and regularly receive tips.”

The bill also amends the FLSA to prohibit employers, managers, and supervisors from benefiting from tip pools or otherwise keeping a portion of employees’ tips for “any purposes.”

This article was prepared by Jordan M. Odo.