Oregon.jpgAuthored by Alex Passantino

As we reported previously, a federal judge in Oregon recently ruled that the U.S. Department of Labor’s 2011 tip-pooling regulations were invalid.  Earlier this week, the court entered a final judgment, striking down and setting aside those portions of the DOL regulations that state that “tips are the property of the employee when his/her employer has not taken a tip credit against its minimum wage obligations pursuant to 29 U.S.C. 203(m), and [that extend] tip pool limitations to employers who do not take a tip credit against their minimum wage obligations.”

As part of its final judgment, the court enjoined DOL’s enforcement of the regulation against the Washington Restaurant Association, the Oregon Restaurant and Lodging Association, Alaska CHARR, the National Restaurant Association, and/or any entity, employer, or individual who is able to demonstrate membership in one of those associations as of June 24, 2013.  In addition, where a member of one or more of the associations does not take a tip credit against the federal minimum wage, DOL is prohibited from taking any action based on tip pooling practices.

To be clear, the court’s decision is not a wholesale rejection of DOL’s rules with respect to tip credit.  Rather, the final judgment directly impacts only those employers (1) who are members of one or more of the associations and (2) who do not take a tip credit to satisfy the federal minimum wage.    

Given the importance of this issue — particularly in the context of DOL’s regulatory authority, as we discussed in our previous post — it seems likely that DOL will appeal.  We will, of course, keep you apprised of any further developments.