DOL Not Shucking Tradition: Recent Opinion Letter on Tip Pool Inclusion

Because the employer takes a tip credit, the DOL explains the tip pool must comply with “traditional” tip pool laws and regulations. This means, according to regulations under the Fair Labor Standards Act (FLSA), the tip pool must be limited to employees who “customarily and regularly receive tips.” 29 CFR 531.54(c)(1); see 29 U.S.C. § 203(m)(2)(A). It is well-established that employees in customer service positions who have sufficient interaction with customers are considered proper participants in traditional tip pools.

Quick Hits

• The DOL’s opinion letter FLSA2025-03 explains that, based on a review of their customer-facing job duties, front-of-house oyster shuckers can participate in traditional tip pools.
• Employers that take a tip credit must ensure that their tip pools adhere to FLSA regulations, specifically limiting participation to employees who “customarily and regularly receive tips.”

The DOL’s opinion letter examines the job duties of the front-of-house oyster shuckers (who are stationed behind a bar where customers are seated). Their duties include sharing and detailing the various oyster offerings, making suggestions, and answering customer questions about the different options, all while preparing the oysters in view of the customers. The opinion letter does not reveal anything novel; rather, it aligns with federal regulations and affirms the DOL’s position on who is eligible to participate in traditional tip pools.

Over the years, the DOL has issued several opinion letters to clarify which employees are considered to customarily and regularly receive tips. In addition to the more obvious positions, such as servers, the DOL has recognized that itamae-sushi chefs, teppanyaki chefs, sommeliers, and hibachi waiter-chefs are also occupations where employees customarily and regularly receive tips. Furthermore, the DOL has found employees need not receive tips directly from customers, as is the case with barbacks, to be classified as tipped employees. Conversely, back-of-house positions, such as dishwashers, salad preparers, and cooks, are not considered employees who customarily and regularly receive tips.

The opinion letter concludes the front-of-house oyster shuckers are considered employees who customarily and regularly receive tips. According to the DOL, they are comparable to sommeliers and front-of-house itamae-sushi chefs or teppanyaki chefs, and therefore can be lawfully included in a traditional tip pool.

Practice Pointers

Whether an employee can participate in a traditional tip pool depends on the employee’s job duties. Employers must evaluate whether the employee sufficiently interfaces with customers and/or is engaged in customer service (even if the employee does not receive direct tips from customers).

If an employer does not take a tip credit and pays all participants in the tip pool the full minimum wage or higher, federal law permits “non-traditional” tip pooling, where the employer may include back-of-house positions. However, it is important to note that some states (such as California) may limit tip pool participants to only those who are customer-facing and engaged in customer service, even when all employees are paid the full minimum wage or higher.

Finally, employers are never allowed to keep tips, and managers and supervisors cannot participate in any tip pool, even if all employees are paid the full minimum wage or higher.

Ogletree Deakins’ Wage and Hour and Hospitality Practice Groups will continue to monitor developments and will provide updates on the Wage and Hour and Hospitality blogs as additional information becomes available.

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