Minnesota Employers Should Be Wary of Implementing New Federal Gratuity Pooling Rule

The United States Department of Labor issued a new ruling on Tuesday which allows food and beverage establishments to share tipped employee gratuities with non-tipped employees.  The new rule announced Tuesday only allows gratuity pooling if the tipped employee is paid the full federal minimum wage of $7.25 an hour.

Minnesota employers need to be very cautious about making any changes based on this rule as Minnesota has its own law on gratuity pooling which supersedes the federal rule.  It remains unlawful to compel gratuity pooling in Minnesota.

Under Minnesota Statutes § 177.24, subd. 3, any gratuity received by an employee is the sole property of the employee.  No employer is permitted to require an employee to contribute or share a gratuity received by the employee with the employer or other employees or to contribute any of the gratuity to a fund or pool operated for the benefit of the employer or employees.  Employees are permitted to voluntarily share gratuities with other employees if the decision to do so is made by the employees without employer coercion or participation.

The new federal rule is set to go into effect in 60 days. The Biden administration could seek to delay implementation of the rule and begin work to produce its own rule.  It could elect not to defend the Trump rule in an expected court challenge.

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