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Compliance with New Tip Credit Notice Rules

May 25, 2011
The DOL rules took effect May 5, 2011. They were released with only 30 days' notice and make major and significant changes to existing tip-credit-notice regulations. Failure to follow the new regulations could result in an employer losing the right to apply any tip income toward minimum wage obligations.

The National Restaurant Association cannot give you legal advice but we urge you to take the following steps:
1) Understand the rules. Under the previous regulations, employers were able to provide a simple notice to inform tipped employees that the employer was applying a tip credit toward the employer's minimum-wage obligations, as federal law allows. The new rules lay out a more complex and sometimes confusing set of requirements, including informing each employee of their cash wage, tip credit taken, and more. And even though federal law does not require an employer to provide notice of the tip credit to employees in writing, the new DOL regulations strongly recommend that notice be given in writing so employers have proof of compliance if challenged.
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2) Implement the new regulations in your operation. We recommend that you immediately make efforts to comply in good faith with the new tip-credit-notice requirements. The NRA cannot provide legal advice. However, we offer suggested compliance guidelines you can discuss with your legal counsel. These guidelines include a template you can use to provide written notice to your tipped employees about the tip credit. We include a second version of the template for restaurants that operate a employer-required tip pool, since that triggers an additional notice requirement.
>> Download the NRA’s suggested compliance guidelines and sample notices to employees .
3) Stay updated. The NRA believes DOL violated federal law in making substantive changes to federal regulations without the benefit of a legally required notice-and-comment period for affected industries. This change affects the notice that restaurants provide to more than 2 million tipped employees in our industry.
>> Visit for the latest information and resources.
Information provided by the National Restaurant Association
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