Labor Department finalizes penalty for violating tip rule

September 24, 2021

The Labor Department on September 23rd issued a final rule that penalizes employers who take their employees’ tips.

Under the rule, the Department can assess civil money penalties 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 rule applies to managers and supervisors who may contribute to the tip pool that are paid to employees.

“The final rule clarifies that while managers and supervisors may not receive tips from mandatory tip pools or tip sharing arrangements, managers or supervisors are not prohibited from contributing tips to eligible employees in mandatory tip pools or sharing arrangements,” the document states.

The effective date for the final rule is November 23, 2021.

Employer violations regarding civil money penalties will be assessed by Labor’s Wage and Hour Division.

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