Sponsors
The bill makes broader tip‑pooling lawful when tipped workers are paid the full minimum wage, offering potential fairness and reduced legal risk for employers at the cost of possible reduced tip income for workers, higher employer labor expenses, and added compliance uncertainty.
Tipped workers (e.g., servers, bartenders) can share tips with non‑tipped coworkers if they are paid at least the full minimum wage, which can lead to fairer tip distribution and improved teamwork among front‑ and back‑of‑house staff.
Employers (particularly small businesses) get clearer, expanded flexibility to structure tip pools when the wage condition is met, reducing litigation risk over permissible pool participants and simplifying payroll practices.
Tipped employees risk receiving smaller individual tip shares if non‑tipped employees are included in pools, which can reduce take‑home pay for workers who rely on gratuities.
Employers may need to pay higher direct wages to meet the full minimum‑wage requirement for tipped staff, raising business labor costs that could lead to higher prices for customers or reduced staffing/hours.
Unclear details about who qualifies, how tip credits are accounted for, and how pools are administered could create compliance costs, disputes, and enforcement uncertainty for both employers and workers.
Based on analysis of 2 sections of legislative text.
Permits employer-required tip pools to include non-tipped employees only when the tipped employees in that pool are paid at least the full federal minimum wage by the employer.
Introduced January 3, 2025 by Andrew S. Biggs · Last progress January 3, 2025
Allows employers to include non-tipped workers in employer-required tip pools so long as the tipped employees in that same pool are paid at or above the full federal minimum wage (i.e., no tip credit is taken for those tipped employees). The change defines two permissible tip-pool types: (1) traditional pools of employees who customarily and regularly receive tips, and (2) mixed pools that include both tipped and non-tipped employees, provided the tipped employees in the mixed pool are paid the full minimum wage by the employer. The amendment modifies the Fair Labor Standards Act tip-pooling language to expand who may share tips in mandated tip pools, while conditioning that expansion on the employer paying full minimum wage to the tipped employees in the pool.