Ninth Circuit Reverses District Court Decisions, Reviving U.S. Department of Labor Rule Restricting Tip-Pool Distribution

Reversing a federal district court’s order invalidating 2011 revisions to the DOL’s tip-pool regulation, a divided Ninth Circuit held the agency acted within its authority when it promulgated the rule change. As revised, the tip pool regulation prohibits an employer from including non-tipped staff in tip pools even when it does not take the tip credit, but instead pays the full statutory minimum wage. The FLSA’s “clear silence as to employers who do not take a tip credit has left room for the DOL to promulgate the 2011 rule,” the majority concluded, rejecting the notion that the appeals court itself had foreclosed the agency’s ability to do so by virtue of its 2010 decision in Cumbie v. Woody Woo. Judge Smith dissented (Oregon Restaurant and Lodging Association v. Perez, February 23, 2016, Pregerson, H.).   Read the full article here.