Bill would let employers dilute worker tips by pooling with non-tipped staff
H.R. 85 — Small Business Flexibility Act · Filed by Andy Biggs (R-AZ) · Introduced Jan 3, 2025 · Referred to committee
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What it does
This bill amends the Fair Labor Standards Act to allow employers to pool tips among a broader group of employees, including those who do not customarily receive tips. Currently, tip pooling is restricted to employees who regularly receive tips; this bill would permit pooling that includes non-tipped workers (such as kitchen staff or dishwashers) alongside tipped employees, provided the non-tipped workers earn at least the federal minimum wage.
Why we flagged it
The bill's operative mechanism is to broaden the definition of permissible tip pools, allowing employers to include non-tipped workers in tip-sharing arrangements. This is functionally a wage-management tool that reduces the effective compensation of tipped workers without raising the wage floor for non-tipped workers.
What the text implies
- Employers gain incentive to hire more non-tipped workers (kitchen, dishwashing, prep) and include them in tip pools, reducing per-worker tip share without raising total tip revenue.
- Tipped workers' effective hourly compensation may decline even if nominal tip amounts remain constant, as tips are now divided among a larger group.
The full analysis lists 4 implications of this text.
Who stands to gain
small restaurants and food service operators; hospitality employers; retail and service businesses with mixed tipped/non-tipped workforces