Dive Brief:

• Rosa Mexicano has agreed to pay $3.6 million to settle a 2016 lawsuit brought by several current and former workers against the nationwide chain of Mexican food restaurants over its tip sharing practice, court documents show.
• Some of the chain's restaurants were accused of violating the Fair Labor Standards Act (FLSA) and various state laws by requiring tipped workers at several locations to share a portion of their tips with “floaters,” employees who were not eligible to receive tips because they did not interact with customers. The restaurants also were accused of failing to take the proper tip credit under the FLSA and of violating minimum-wage and overtime compensation requirements under federal and state laws.
• The restaurant chain argued during mediation that the “floaters” had sufficient customer interaction to be tip-eligible, and that the position didn’t exist at all of its restaurants.

Dive Insight:

Tip sharing, or tip pooling, has been a contentions topic over the last few months. Different opinions on the topic from the Obama administration, the courts and now the Trump administration have left employers in limbo.

Generally speaking, it's expected that the current U.S. Department of Labor (DOL) will soon promulgate regulations allowing tip pools that include non-tipped workers, if all parties involved are paid at least minimum wage.

Congress also recently amended the FLSA to address concerns that DOL's move could allow managers to keep worker tips. DOL followed up with new guidance on that amendment in a field assistance bulletin. The April 2018 guidance explains that, for purposes of the recent amendment to the FLSA, a “supervisor or manager” is an individual who performs the duties of an exempt manager under the FLSA’s “executive” exemption, according to Jackson Lewis attorneys Jeffrey Brecher and David Golder.