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In 9th Circ. Restaurateurs Must Tiptoe Around Tip Pools

Taylor Burras
March 8, 2016

Taylor Burras' article, "In 9th Circ. Restaurateurs Must Tiptoe Around Tip Pools" was published in Law360 on March 8, 2016.

From the article...

"On Feb. 23, 2016, a divided three judge panel of the Ninth Circuit Court of Appeals validated regulations by the U.S. Department of Labor that significantly limit employers' ability to maintain tip pools that extend beyond 'customarily and regularly tipped' employees. The controversial 2-1 decision in Oregon Restaurant & Lodging Association v. Perez (2016 BL 50460, 9th Cir., No. 13-35765, 2/23/16) reverses two federal district court rulings that relied on the Ninth Circuit’s 2010 ruling in Cumbie v. Woody Woo Inc. (596 F.3d 577).

The Ninth Circuit surprisingly ruled that the DOL has the authority to regulate tip-pooling practices even where the employer does not take a tip credit. More specifically, the court upheld a 2011 DOL rule that employers cannot require that tips given to waiters, casino dealers and other service staff be shared with support staff such as dishwashers and cooks, even if the tipped employees are paid minimum wage. In overturning rulings by district courts in Nevada and Oregon (consolidated on appeal), the Ninth Circuit ruled that the DOL regulation was reasonable and consistent with Congress's goal of ensuring that tips stayed with the employees who initially receive them."

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