On January 14, 2025, the U.S. Department of Labor (DOL) issued Opinion Letter FLSA 2025-1 pertaining to participation in a tip pool at a “quick service restaurant.”
The DOL reiterates its position that managers and supervisors cannot keep tips unless they “solely and directly” provide service to customers, regardless of whether or not a tip credit is taken.
The DOL clarified that even if a manager or supervisor works an entire shift in a nonsupervisory role, they cannot participate in a tip pool, as the primary duty test is based on duties performed over at least the workweek, not shift-by-shift.
The opinion letter responded to two questions from the quick service restaurant. The first question focused on whether the assistant team lead and the team leaders, deemed supervisors or managers under 203(m)(2)(B) of the Fair Labor Standards Act (FLSA), could receive tips if they work a shift in a non-managerial or non-supervisory role.
The DOL explained that the regulations define a manager or supervisor who may not keep tips as one who meets the executive employee duties test, which is the same duties test used to determine whether an employee is exempt under the FLSA (i.e., direct the work other full-time employees, have the authority to hire or fire other employees, and have a primary duty of managing the enterprise or a customarily recognized department or subdivision of the enterprise.) Determining an employee’s “primary duty” is a fact-intensive inquiry requiring an analysis of the employee’s duties worked in at least a workweek.
The DOL responded to the second question, which concerned whether a supervisor or manager who clocks in and works an entire shift in a non-supervisory capacity, may participate in a tip pool. That employee may not participate in a tip pool, because the primary duty test is based on the employee’s duties performed in the workweek (or longer period of time) and not shift-by-shift. A non-managerial and non-supervisory employee who does not meet the executive duties test is not converted to a manager or supervisor simply because the employee is the most senior or highest-ranking employee on a particular shift. As a result, employees in these circumstances are not prohibited from receiving tips from a tip pool.
