Oregon law fails to address tips and tip pools and, therefore, BOLI does not enforce any standards regarding tips. While the U.S. Department of Labor (DOL) establishes regulations regarding tips based on the federal Fair Labor Standards Act (FLSA), the DOL and the courts interpret the law differently. Recent cases within the United States District Court for the District of Oregon have held that the FLSA does not regulate tips if the employer does not claim a tip credit (and Oregon prohibits employers taking a tip credit). Employers are also free to make the tip pooling arrangements they dictate a condition of employment. As a result, even though the Department of Labor regulations grant restaurant workers control over their tips, those workers cannot currently assert those rights in Oregon courts.
The PRWA wants to hear from you about tips and tip pools. What has been your experience? How much control did you have over your tips and tip outs? Please write us with your story at contact@pdxrwa.org
Below are the standards set by the U.S. Department of Labor on the topic of tips. Be aware, these interpretations are specific to DOL and the FLSA and are not meant to be confused for Oregon employment law.
Tips:
All tips that an employee receives are his or her property. The law forbids any arrangement between the employer and the tipped employee whereby any part of the tip received becomes the property of the employer.
Tip Pools:
The requirement that an employee must retain all tips does not preclude a valid tip pooling or sharing arrangement among employees who customarily and regularly receive tips, such as waiters, waitresses, bellhops, counter personnel (who serve customers), busboys/girls and service bartenders.
Tip Pool Criteria:
- consists of traditionally tipped employees: waiters, waitresses, servers, bartenders, counter personnel (who serve customers), busboys/girls, and hosts
- cannot include owners or managers in the tip pool
- cannot take more than a “customary and reasonable” amount of each employee’s tips (15% of tips or 2% of sales is customary and reasonable according to the Department of Labor)
When non-traditionally tipped employees are included in a tip pool, that is when the system has to be entirely voluntary—each employee can decide how much (if any) of her tips to share with anyone else.
Tip-Out Criteria:
- must be entirely voluntary
- each tipped employee must be able to decide on their own whether to tip out any non-tipped employee, and if so, how much
