Executive Summary: On December 5, 2017, the U.S. Department of Labor (DOL) published its Notice of Proposed Rulemaking (NPRM) to reverse the Obama Administration’s tip rule prohibiting the distribution of tips to anyone other than the tipped-employees who earned them (available here). The Obama-era rule has been lauded by employee-advocates as a needed protection from employer abuse, while criticized by employers for stifling their ability to share tips with other non-tipped employees. It has also created legal uncertainty throughout the country, and caused a split among federal courts. Although the DOL’s newly proposed rule will provide increased short-term certainty for employers, legal challenges on this issue are likely to continue.
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