Discrimination & Tip Pools: When Companies and the DOL Get It Wrong

By Linda H. Evans,
Senior Associate.


The Customer May Not Always Be Right!


A Lowe’s store in Virginia recently received a request from a customer: No black drivers were to deliver to her house. Initially, managers at the store honored the request. However, now that the company officials know about it, the managers are no longer with the company. Lowe’s says it has no tolerance for discrimination. Good move, Lowe’s!


Tip for employers: While most companies try to honor customers’ requests, there should be an exception for those requests which discriminate against a group of workers. Whether for age, gender, race, ethnicity, religion, sexual orientation, or disability, if a customer asks a company to discriminate, it is actually a request for an illegal action. A smart company says “no” right away and avoids spending time and money to defend itself.


And The DOL May Not Always Be Right Either!


Tip pools have long been a part of the hospitality industry and can be confusing to operate. In recent years, there has been conflict between the Department of Labor’s (DOL) regulations and some courts as to who can be included in a tip pool. Both the 4th Circuit and the 9th Circuit have sided with the industry and recently made rulings that do not agree with the DOL’s regulations. Basically, the DOL wants to limit who can be included in the pool while the courts and industry believe that, under certain circumstances, the pool can be expanded to include more workers, specifically those considered “back of the house”. But beware, there is no final answer yet!


Tip for employers: Call us for more information on tip pools . . . we don’t want you drowning in the sea of DOL regulations!