Temperatures aren’t the only thing on the rise this summer. Wage and hour lawsuits brought by service industry employees are heating up—particularly in the food service and hospitality sectors—leading to significant and costly legal exposure. In response, the U.S. Department of Labor (DOL) implemented strict rules regarding tipped employees as part of its aggressive stance against wage and hour violations. Unfortunately, given the technical nature and nuances of these rules, employer compliance can be anything but simple. To keep the heat down in your kitchen this summer, read on for a brief summary of the DOL’s proper tip pooling and service charge practices.


What is a tip credit?

Under the Fair Labor Standards Act (FLSA), tipped employees are t...